Monaco’s Individual Bank Accounts, Banking Law & Regulations

by Elliot Clark on March 6, 2009

Monaco as an offshore banking center is quite specific. It has been traditionally very attractive for individual customers; however had nothing to offer to corporate clients as an offshore banking center. Taxation structure tends to discourage companies to use Monaco’s banking services, unless their operations are only domestic. All companies that receive more than 25% of their income from foreign sources are taxed with 33.33% tax. Due to Monaco’s small size number of companies having less than 25% of incomes generated from foreign sources is very low and they cannot adequately support banking sector.

Monaco never attempted to offer itself as an offshore banking center; instead a large part of Monaco’s banking sector was private banking services to rich the rich citizens of Monaco. However this changed during last decade. Monaco introduced safe legislative framework including regulatory regime ran by Bank of Franc, abolished tax on interest payments. Liberal and free environment attracts Italian customers, who shift from highly regulated and tight domestic tax regime.

Although tax system is extremely unfavorable for exporting business, it is much stricter in surrounding countries, such as France and Italy. In addition, there are some incentives for startup businesses. Due to this reason many businesses have chosen to operate in Monaco. Major industry in the country’s economy is pharmaceuticals industry that supplies products to regional markets.

High tax rates discourage development of activities that are associated with making profit, therefore Monaco facilitatesOffshore Banking Monaco appearance of headquarter offices, research and development, logistics, etc. On the other hand, even in these cases social contribution rates are excessive (40%) that is one more discouraging factor.

Currently around seventy banks operate in Monaco providing 300,000 bank accounts. Banks of Monaco provide bank account mostly to Monaco non-residents: around 85% of customers are non-residents and only 15% residents (5,000 local customers versus 25,000 foreigners). Total turnover of banking sector is above $1.5 billion. Despite the fact that large part of Monaco banking customers are physical persons, number of corporate clients also rises steadily.

Monaco offshore banking regulations in many aspects resemble French Banking Law. Monaco sector’s offshore banking bank secrecy and confidentiality is ensured by Monaco Criminal and Company Law. Bank secrecy requirement is ensured by Clause 57 the French law and anti-money-laundering measures are defined and enforced by laws of Monaco. It is noteworthy that for individuals other than French residents bank secrecy levels are quite high, however to some extent compromised for French residents.

Comments on this entry are closed.

Previous post:

Next post: