Monaco -- Travel Rule Implementation Regulatory Overview

Monaco has proactively adopted and implemented the FATF Travel Rule, integrating it into its comprehensive anti-money laundering and counter-terrorist financing (AML/CFT) framework. As a member of MONEYVAL (the Council of Europe's expert committee evaluating AML/CFT measures, associated with FATF), Monaco is committed to adhering to international standards.

Here's a breakdown of the FATF Travel Rule implementation in Monaco:

1. Whether Adopted & Effective Date

• Adopted: Yes, the FATF Travel Rule requirements are incorporated into Monegasque law.
• Key Legislation: The primary legislative text that updated Monaco's AML/CFT framework to specifically address virtual assets and implement the Travel Rule is Ordonnance Souveraine n° 8.761 du 10 novembre 2021 modifiant l'Ordonnance Souveraine n° 1.362 du 3 août 2009 relative à la lutte contre le blanchiment de capitaux, le financement du terrorisme et la corruption (Sovereign Ordinance No. 8.761 of November 10, 2021, amending Sovereign Ordinance No. 1.362 of August 3, 2009, on the fight against money laundering, terrorist financing, and corruption).
  • This Ordinance amended the fundamental AML/CFT law: Loi n° 1.362 du 3 août 2009 relative à la lutte contre le blanchiment de capitaux, le financement du terrorisme et la corruption.
  • Note: While the primary law is from 2009, it has been significantly amended over time to align with updated FATF recommendations, with the 2021 Ordinance being crucial for virtual assets.
• Effective Date: The Sovereign Ordinance n° 8.761 entered into force upon its publication, which was November 19, 2021.

2. Threshold Amounts

• Monaco generally follows the FATF Recommendation 16 for wire transfers and its application to virtual assets.
• For VASP-to-VASP transfers: There is effectively no de minimis threshold for the mandatory information exchange for transfers between two obliged entities (VASPs). Full originator and beneficiary information must be collected and transmitted for all virtual asset transfers, regardless of value, between registered VASPs.
• For transfers involving an unhosted wallet (or transfers not between two obliged entities): When a VASP initiates or receives a virtual asset transfer with an unhosted wallet, due diligence requirements (including collecting information about the originator/beneficiary) typically kick in. The EUR 1,000 threshold (or equivalent in other currencies/virtual assets) usually applies in scenarios where a VASP is interacting with a non-VASP entity, requiring the VASP to obtain and hold relevant information for transactions above this amount. Below this threshold, simplified due diligence might apply, but transaction monitoring remains crucial.

3. Which VASPs Are Covered

Monaco's legislation covers a broad range of entities dealing with virtual assets, defined as "prestataires de services sur actifs numériques" (Digital Asset Service Providers or DASPs/VASPs). This includes any natural or legal person who, as a regular occupation or commercial activity, provides one or more of the following services to third parties:

• Custody of digital assets or cryptographic keys on behalf of third parties.
• Exchange services between digital assets and fiat currencies, or between different digital assets.
• Operation of a trading platform for digital assets.
• Transfer of digital assets (which directly implicates the Travel Rule).
• Investment advice on digital assets.
• Placement of digital assets.

These entities are subject to the same AML/CFT obligations as traditional financial institutions, including customer due diligence (CDD), record-keeping, suspicious transaction reporting (STR), and Travel Rule compliance.

4. Technical Implementation Requirements

Monaco's legislation, consistent with FATF guidelines, specifies what information must be collected and transmitted, rather than prescribing specific technical protocols (e.g., TRISA, OpenVASP, Sygna).

VASPs in Monaco are expected to:

• Ensure the secure transmission of the required originator and beneficiary information to the beneficiary VASP (or to the originator VASP when receiving funds).
• Adopt reliable and interoperable solutions to facilitate this information exchange, allowing for seamless communication with other VASPs, domestically and internationally.
• Implement systems that can handle both incoming and outgoing Travel Rule data.
• Verify the accuracy of the information received and take appropriate action if discrepancies or missing information are identified.
• Maintain records of all collected and transmitted information for at least five years.

5. Information Required

In line with FATF Recommendation 16, for each virtual asset transfer, VASPs must obtain and transmit the following information:

For the Originator:

• Name (of the customer who initiated the transfer).
• Account number (or unique transaction identifier, e.g., the sending wallet address/ID).
• Physical address (of the customer).
• National identity number, customer identification number, or date and place of birth (depending on the VASP's CDD records).

For the Beneficiary:

• Name (of the customer who is the intended recipient).
• Account number (or unique transaction identifier, e.g., the receiving wallet address/ID).

This information must be transmitted to the beneficiary VASP (or received from the originator VASP) immediately and securely with the virtual asset transfer itself or during the transaction processing.

6. Penalties for Non-Compliance

Monaco's AML/CFT framework, outlined in Loi n° 1.362 and its amending texts, includes significant penalties for non-compliance by obliged entities, including VASPs. These penalties can be administrative, financial, and in severe cases, criminal.

• Administrative Sanctions: The supervisory authorities (such as the Direction de l'Expansion Économique - DEE, and the Service d'Information et de Contrôle sur les Circuits Financiers - SICCFIN) can impose administrative sanctions, which may include:
  • Formal warnings.
  • Censures.
  • Temporary or permanent withdrawal of authorization or registration.
  • Appointment of a provisional administrator.
• Financial Penalties: Substantial monetary fines can be levied on institutions and their responsible individuals. These fines can range from thousands to millions of Euros, depending on the severity and recurrence of the breach. For example, severe breaches of AML/CFT obligations can lead to fines of up to EUR 5 million for legal entities and EUR 1 million for individuals, or even a percentage of the annual turnover.
• Criminal Penalties: In cases of deliberate or systematic non-compliance, particularly where it facilitates money laundering or terrorist financing, criminal charges can be brought against the VASP and its management. This can result in imprisonment for individuals and higher fines for legal entities.

Supervisory Authorities:

• Direction de l'Expansion Économique (DEE): Responsible for the registration and supervision of VASPs in Monaco.
• Service d'Information et de Contrôle sur les Circuits Financiers (SICCFIN): Monaco's Financial Intelligence Unit (FIU), responsible for receiving and analyzing suspicious transaction reports (STRs) and enforcing AML/CFT regulations.

References & URLs

• Loi n° 1.362 du 3 août 2009 relative à la lutte contre le blanchiment de capitaux, le financement du terrorisme et la corruption (consolidated version often available through legal databases): Access via Journal de Monaco – search for "Loi 1.362" and its modifications for the most up-to-date text
• Ordonnance Souveraine n° 8.761 du 10 novembre 2021 (the key implementing text for virtual assets and Travel Rule): Journal de Monaco - Ordonnance Souveraine n° 8.761 du 10 novembre 2021
• Direction de l'Expansion Économique (DEE) – VASP Registration and Supervision: DEE - Activités de Services sur Actifs Numériques (French)
• Service d'Information et de Contrôle sur les Circuits Financiers (SICCFIN): SICCFIN Official Website (French and English options available)

In summary, Monaco has robustly integrated the FATF Travel Rule into its legal framework, making it mandatory for registered VASPs to comply with strict information collection and transmission requirements for virtual asset transfers.