All questions


The Principality of Monaco is not a Member State of the European Union. As a consequence, the EU freedom of establishment and the EU free provision of services are not applicable in Monaco.

Monaco is, however, part of a monetary union with France and consequently the EU, and uses the euro. In this context, Monaco has entered into several bilateral monetary agreements with France and the EU, pursuant to which French and EU prudential regulations governing the organisation of credit institutions apply to those established in Monaco. In this context, France plays an important role in Monaco in the banking industry for historical, geographical and cultural reasons.

Another key element of the Monegasque banking sector is that almost all Monegasque credit institutions are controlled by foreign and French banking groups. Pursuant to the most recent annual report 2021 of the Monegasque Supervisory Commission on Financial Activities (CCAF), there are currently 27 credit institutions established in Monaco, 12 of which are organised as branches of foreign credit institutions established in France, Switzerland and the United Kingdom. The remaining 15 are organised as Monegasque subsidiary corporations of French, Swiss, Andorran or Italian parent banking companies.

Furthermore, the activities of Monegasque credit institutions established in the form of local subsidiaries are generally orientated towards private banking and wealth management.

The regulatory regime applicable to banks

i Brief overview of the bilateral relationship between Monaco and France in the banking sector

France and Monaco entered into a treaty on exchange control on 14 April 1945, which established the principle of the application of French banking regulations to credit institutions established in Monaco. The exchanges of letters entered into between France and Monaco on 18 May 1963, 6 April and 10 May 2001, 8 November 2005 and 20 October 2010 detailed the scope of the application of this general principle. Pursuant to these exchanges of letters, the rules provided for in the French Monetary and Financial Code (CMF) governing the organisation, functioning and supervision of credit institutions shall apply to credit institutions established in Monaco.

In addition, pursuant to the provisions of Sovereign Ordinance No. 3,021 of 26 November 2010 implementing the exchange of letters entered into between France and Monaco on 20 October 2010, Monegasque credit institutions are under the supervision of the French prudential regulator, the Autorité de Contrôle Prudentiel et de Résolution – ACPR.

Furthermore, in the context of the introduction of the euro in Monaco, Monaco and France, itself acting on behalf of the EU, entered into a monetary agreement on 5 December 2011 (the Monetary Agreement), implemented into Monegasque legislation by Sovereign Ordinance No. 3,559, dated 5 December 2011.

Pursuant to Article 9 of the Monetary Agreement, Monaco:

  1. directly applies, without need for any internal implementation, decisions taken by the European Council in application of Article 129 of the Treaty on the Functioning of the European Union that concern the European system of central banks;
  2. directly applies, without need for any internal implementation, EU legislation relating to bank notes and coins taken in application of Article 133 of the Treaty on the Functioning of the European Union;
  3. directly applies, without need for any internal implementation, EU legislation relating to the activities and supervision of credit institutions, and to the prevention of systemic risks, which are directly applicable in France (i.e., EU regulations) or transposed into French regulations (i.e., EU directives), in particular into the CMF. The EU legislation directly applicable in Monaco is listed under Annex A of the Monetary Agreement; and
  4. implements into Monegasque legislation equivalent measures to those contained in certain EU legislation listed under Annex B of the Monetary Agreement. The EU legislation listed under Annex B regards the field of financial law, anti-money laundering regulations and the fight against fraud and counterfeiting.

The list of EU legislation included under Annex A of the Monetary Agreement is amended by the European Commission whenever the texts concerned are amended and whenever a new text is adopted by the EU, taking into account the date of entry into force and, as the case may be, the date of their transposition into French legislation (although, formally, any modification of the list provided for under Annex A is published in Monaco through the publication of a sovereign ordinance in the official legal gazette of Monaco).

When they come from an EU directive and must be transposed into French legislation, the legal measures set out under Annex A should be applied by Monaco as soon as they are incorporated into French law.

As regards EU legislation included under Annex B, a joint committee composed of representatives of Monaco and representatives of the EU is competent to amend the list under Annex B and to examine the equivalence between the legal measures taken by Monaco and those taken by EU Member States. Decisions from the joint committee are made unanimously.

On the contrary, and pursuant to Article 4 of Ordinance No. 3,021, French regulations that do not strictly concern the organisation and regulation of credit institutions do not apply in Monaco. Consequently, Monegasque credit institutions remain subject to Monegasque-specific regulations in all other fields, such as, notably, contract law, securities law, anti-money laundering law and financial activities. These financial activities are governed by Law No. 1,338 of 7 September 2007 which has been substantially amended by Law No. 1,515 of 23 December 2021 published in the Journal de Monaco of 7 January 2022 and more recently, by Law No. 1,529 of 29 July 2022 published in the Journal de Monaco of 12 August 2022 and Sovereign Ordinance No. 1,284 of 10 September 2007, as amended, and are defined as follows:

  1. management of portfolios on behalf of third parties;
  2. management of collective investment schemes under Monegasque law;
  3. receipt and transmission of orders on behalf of third parties;
  4. provision of advice or assistance in the areas referred to in points (a) to (c);
  5. execution of orders on behalf of third parties;
  6. management of collective investment schemes under a foreign law; and
  7. proprietary dealing.

Consequently, a credit institution carrying out these financial activities in Monaco will also be subject, for those activities, exclusively to this specific Monegasque legislation and under the local supervision of the CCAF.

ii Legal forms of Monegasque credit institutions and licensing requirements

Monegasque credit institutions may take the form of either a local limited liability company, the société anonyme monégasque (SAM), or a registered branch of a foreign banking company. In practice, the Monegasque authorities now tend to require that any new banking establishment in the principality takes the form of a local SAM, and do not favour the setting up of branches of foreign credit institutions, with the exception of branches of French credit institutions involved in retail banking activities.

Pursuant to Law No. 1,144 of 26 July 1991 governing the conditions to exercise economic activities in Monaco, in particular banking activities, and to Ordinance No. 3,021, the creation of a Monegasque credit institution, whether in the form of an SAM or in the form of a local branch, is subject to the delivery of both an authorisation from the government and a licence from the ACPR, which will ensure that the prudential requirements imposed by both EU and French legislation are satisfied.

Ordinance No. 3,021 further stipulates that a representative of the government attends all ACPR meetings regarding the consideration of files related to Monegasque credit institutions and that, before granting a banking licence to a credit institution, the ACPR should confirm that the establishment of the credit institution has been, in principle, approved by the government.