As part of its role to conduct on-going supervision of financial institutions in the Principality of Monaco, the Commission de Contrôle des Activités Financières (the “Commission”) carried out an inspection of the firm X (the “Firm”).

The inspection report found a number of breaches. The Commission opted to open proceedings that would potentially result in administrative penalties against the Firm, under Article 34 of Act No. 1,338 of 7 September 2007. The Firm was notified of this. A rapporteur was appointed, and produced a report. The executive committee of the Commission decided, under Article 38 of Act No. 1,338, to continue the proceedings and summoned the Firm to attend a hearing.

After hearing the arguments presented by the Firm and its Counsel, the Commission:

•  ruled that, in view of the observations presented by the Firm, it was not guilty of failing to maintain an up-to-date organisation chart and to afford access to client files, based on the accusations made;
•  ruled that the Firm was guilty of the following breaches:
  • failing to maintain an adequate internal organisation allowing the origin and date of reception of orders to be proven in a detailed fashion,
  • employing certain executive and non-executive staff without professional certification,
  • failing to maintain a permanent internal control function at the Firm,
  • failing to establish sufficiently formalised tests of its business continuity plan.

The Commission also found that the Firm had implemented a number of remedial measures after the inspection.

In view of the above, the Commission handed the Firm a penalty in the form of a reprimand, and ordered that the decision be published anonymously on the Commission’s website.