International Fraud & Asset Tracing 2024 Comparisons

Monaco’s civil law system provides for the possibility of filing civil and criminal claims for: 

• fraud; 
• making false statements; 
• corrupt payments; 
• the equivalent of conspiracy; and 
• misappropriation. 

Victims may be parties to the criminal prosecutions, represented by counsel and with access to the file, and may demand damages. Alternatively, they may sue before the civil courts. 

The status of “victim” in a criminal prosecution is defined in Article 2 of the Code of Criminal Procedure: “The action to repair the damage directly caused by a fact that constitutes a penal infraction belongs to all those who have personally suffered... The action will be receivable, indistinctly, for all the damages, material, physical or moral.” 

Fraud

The basic fraud infraction (escroquerie) is defined in Article 330 of the Penal Code as follows: “Whoever, either by using a false name or false quality, or by employing fraudulent manoeuvres to persuade another of the existence of false enterprises, of an imaginary power or credit, or to create the hope of a success, an accident, or of any other chimerical event, persuades another to give him or deliver funds, moveable assets, effects, cash, merchandise, bills, promises, receipts or any other writing containing or operation an obligation or a waiver and who will have by these means defrauded or attempted to defraud all or a part of another’s fortune, is punished by imprisonment of from one to five years and a fine.” 

If the crime involves the issuance of a public offering of whatever nature, the prison sentence is extended to a maximum of ten years. 

Abuse of Confidence

Abuse of confidence, as defined in Article 337 of the Penal Code, is a variant of fraud and consists of misappropriating or dissipating assets entrusted for a specific purpose. The maximum jail sentence is three years. The sanctions are increased to five years if there is a public offering, or where a broker or professional has misappropriated funds – eg, escrowed funds. If a public official (notary or bailiff) or an employee to whom funds are regularly entrusted violates that trust, the maximum sentence is ten years. 

Corruption

Corruption is sanctioned in Article 113 et seq of the Penal Code, which covers public officials or agents and private actors, regardless of nationality, and specifically includes arbitrators. The acts that are sanctioned in Article 113-1 of the Penal Code include a public agent (defined as a person endowed with public authority) retaining a personal interest in an operation or enterprise over which they have authority, and passive or active influence peddling (Article 113-3 of the Penal Code). 

Passive corruption is the crime committed by the corrupted person (public or private), whereas active corruption is committed by the corrupter. Both are sanctioned in Article 113-2. 

False Documents and Testimony

Specific procedures are provided for allegations of the production of false documents in civil procedures (in Articles 290 to 299 of the Code of Civil Procedure, or CPC). Where there is an allegation during a procedure that a document has been falsified, a declaration must be made to the clerk of the court. The court may then compel the person(s) to appear. Since there is no live personal testimony in civil actions, this is a rare occurrence. Alternatively, the court can name an expert to verify the document. 

The person claiming that the documents are false can file a criminal complaint during the trial, as can the public prosecutor. Unless the presiding judge decides that the determination of the validity of the document does not impede the case from going forward, the trial will be suspended pending the determination. 

The elements of faux en écriture (Article 90 et seq of the Penal Code) are the alteration of the truth committed with the knowledge of creating harm in a piece of writing destined to or apt to be used to prove a right or having the effect of a right. It is an aggravating circumstance if the act that is falsified is among those considered to be authentic (notarial) or public (a document), and when the falsification is committed by a public official.

False testimony in a civil case is punished under Article 302 of the Penal Code, while perjury in criminal cases (a distinction is made between correctional or lesser offences and criminal cases) is sanctioned in Articles 300 and 301. 

Conspiracy

Conspiracy is covered in Articles 209–211 of the Penal Code, which sanction any association or agreement to prepare or commit crimes punished by at least five years’ imprisonment as an “association of malefactors”, or malfaiteurs, which is the equivalent of a conspiracy charge. 

Role of a Civil Party

In all these cases, the civil party can be a party to the criminal prosecution by seeking to participate in the investigation or trial (which is a possibility up until the first day of the hearing) or by initiating the investigation by filing the complaint (plainte avec constitution partie civile). The civil party can be awarded damages in the criminal proceedings. 

The civil party victim may also and concurrently sue the defendants in a civil proceeding, on the basis of breach of contract or on the general basis of civil responsibility (Article 1229 of the Civil Code), which is the basis for an action in tort. Article 1229 states that any act that causes harm to another obliges the person whose fault caused the damage to repair it. This includes fault by negligence and imprudence. 

Where there are concurrent civil and criminal lawsuits involving the same parties and facts, the civil court may suspend the civil action awaiting the outcome of the criminal action. 

A claimant whose agent has received a bribe may file a criminal complaint of passive corruption against the agent and the person having paid the bribe, requesting damages. The claimant may also file a civil action in breach of the agency contract. There may be elements of abuse of confidence or fraud, as well as filing false documents. There may also be money laundering (Articles 218 and 219 of the Penal Code) or receipt of stolen property claims (Articles 339 and 340 of the Penal Code). All such claims can be concurrent. 

Parties who assist or facilitate the fraudulent acts of another can be charged as accomplices to the underlying crime. The receipt of fraudulently obtained assets is qualified as recel (receipt of stolen property, including property obtained through a crime), which is punishable under Article 339 of the Penal Code. Money laundering prosecutions are also captured under Articles 218 and 219 of the Penal Code. 

A relatively new provision criminalising the organisation of insolvency to avoid the enforcement of a judgment is set forth in Article 368-1 of the Penal Code, and applies even before a judgment is final. The criminal infraction extends to those who assist in creating the insolvency, and thus to the accomplices. The Penal Code specifically provides that accomplices will be jointly liable. 

Article 1022 of the Civil Code provides for the Paulian Action, which allows creditors to attack all acts performed by a debtor to defraud the creditors of their rights. The effect of the Paulian Action is to consider the transfer to a third party as null and thus unopposable to the creditor. 

The general civil statute of limitations period is five years from the date the party bringing an action knew, or should have known, the facts allowing the lawsuit to be brought. 

Criminal acts defined as délits are mostly punishable by up to three years in prison and tried before a correctional tribunal. The statute of limitations is three years, although corruption carries a special limitation of five years. For acts defined as crimes rather than délits, the imprisonment is from five years to life (but generally 20 years). The statute of limitations is 20 years.

Article 1800, paragraph 2, of the Civil Code provides that a judge may order real or personal assets to be escrowed or sequestered where there is a dispute over ownership between two or more persons. The fruits of the escrowed asset will go to the party establishing the right of ownership. 

As regards criminal proceedings, the investigating magistrate may order a freeze on assets if doing so is considered necessary for the manifestation of the truth. However, confiscation of the proceeds of a crime is also provided for, in Articles 12 and 32 of the Penal Code; these provisions have been further developed under Law 1.535 of 9 December 2022 (Law 1.535).

Law 1.535 transposes into Monaco law certain provisions of the EU Directive (2014/42) on the freezing and confiscation of the proceeds of crime and FATF Recommendations. The Law provides, among other things, for a special service to manage seized or confiscated assets, and to assist in payment of damages awards to victims from the assets. 

In the event of insolvency, a party claiming ownership can request the return of property held by the bankrupt party. Security in the form of seizure orders or a judicial mortgage will have precedence (unless the judicial administrator claims a preferential transfer). The suspect period in Monaco during which assets not transferred for value can be “clawed back” is three years from the date the entity is declared to have become insolvent.

There are no particular or specific rules requiring, for example, a letter before taking action to return assets prior to filing an ex parte motion to seek an order to freeze them. In a standard civil action, it is necessary to demand the reimbursement of any amount alleged to be due prior to starting an action. This is known as a mise en demeure, which also starts the running of legal interest on the claim. 

Freezing Orders

A victim of fraud can request a freezing order on assets belonging to a defendant and held by third parties, as a pre-judgment attachment, by filing an ex parte request with the president of the Court of First Instance (Articles 490 and 491 of the CPC). The claimant must show the existence of a “certain principle of a claim with a sufficiency of evidence”. This is a standard established by case law. It is not required to show the existence of a foreign judgment. A saisie is the equivalent of a freezing injunction and does not require a cross-undertaking or court fees (as a bond). If the request is refused, the creditor can appeal in an ex parte proceeding. The saisie, or freezing order, will be specific to “accounts in a bank” held by a debtor, for example, but it is not necessary to name specific account numbers. The Monaco courts will not issue a general “worldwide” freezing order of the type that can be obtained in common law jurisdictions. 

The pre-judgment attachment grants precedence over other creditors, other than where the assets are pledged to the bank, for example. It is not necessary to explain why it is thought a third party or bank holds assets, nor is it necessary to specify, for example, the numbers of the bank account to be seized. It is not necessary to evoke a risk of asset dissipation to justify the necessity of the seizure order.

Under Article 487 of the CPC, it is possible to unilaterally and without a court order make assets, including bank funds, temporarily unavailable to the defendant by filing a request with the court, which will be served to the third parties or the defendant. The presiding judge will then reply within a very short time with a decision on whether or not to allow the temporary unavailability to continue. While the initial request is ex parte, the third party and the debtor will be informed. If the request fails, then the debtor will have been notified and will often take immediate measures to remove funds from the jurisdiction. 

Debtors and Third Parties Holding Assets

If the assets are held by the debtor rather than a third party, the creditor can request permission from the presiding judge to seize the assets. A bailiff will then intervene at the office or residence to do so, making an inventory of the assets seized. For this procedure (Article 759 of the CPC), it is necessary to explain that there is a risk of dissipation. 

Third parties holding assets, particularly banks, will be served with a seizure order and must reply immediately as to whether such order can be satisfied (whether funds exist and, if so, the amount to be frozen under the order). They must make a complementary declaration at the date of the first hearing of the amount seized, after transactions pending at the time of the seizure are cleared. Failure to do so exposes the bank or third party to being held liable for the amount authorised to be seized. The dissipation of assets seized by a bailiff is a criminal offence.

Escrowing of Assets

It is possible to request the escrowing of assets under Article 1800 of the Civil Code if there is a dispute over ownership, on an ex parte basis. This method has recently been favoured by the courts even where there is no “principle of the certainty of a claim”. The matters are on appeal. 

Court Fees

While no court fees or bonds are payable, Monaco avocat-défenseurs (ie, members of the Monaco Bar, which consists currently of 34 lawyers, not all of whom are avocat-défenseurs) are entitled to 0.4% of the amount in controversy as statutory fees if a claim or procedure is successful, on top of their honoraria, and even if their participation is limited to the mere representation of foreign counsel. They are entitled to 0.2% of the amount of a settlement that may ensue, even when they have not been involved, and to 0.3% if they have been involved in negotiations. 

There are no procedures available for deposition or discovery. Attempts to enforce deposition and discovery orders from foreign courts on Monaco residents in civil cases have not been successful. It is possible to obtain a deposition through the Hague Convention on Taking of Evidence Abroad in Civil or Commercial Matters, to which Monaco is a signatory; however, no coercive measures may be taken in the requesting country of the person refusing to submit to the deposition. 

It is possible to request and obtain, through an ex parte proceeding, a civil order compelling a third party to turn over information. There are no sanctions for refusing to comply, and the party making the request may then sue in an accelerated proceeding known as a référé to seek an order to comply, with an astreinte, or civil fine for refusing to do so. 

The CPC has been revised by Law 1.511 of 2 December 2021, at Article 300-1, to provide the possibility for a court order to be requested in order to preserve evidence. The request can be made ex parte. The order will suspend the running of the civil statute of limitations for a period of not less than six months from the time the order to produce evidence is executed. 

It is possible to request an order ex parte to obtain documentation from a third party, prior to a proceeding, and there are no restrictions placed on the use of such material. 

It is also possible, under the new provisions of the CPC, to request that evidence be produced from a party or a third party (Articles 274, 277, 277-1, 277-2 and 278) during a trial, and a fine (astreinte) can be imposed for failure to do so. The extent to which courts will order such disclosure is being tested in the courts. In a recent case, the force refused to order a general disclosure of “all communications between (the) bank and the client” relating to an investment because it was not precise enough, although it would be impossible for the plaintiff/client to request with greater precision without reviewing the documents. 

In criminal proceedings, the investigating magistrate may obtain all information and documentation necessary for the “manifestation of the truth”, and the civil party victim will have access to the file and thus the documentation. However, no use can be made of it because it is covered by the “secrecy of the instruction” until such time as the investigation is terminated and the matter is tried. 

As indicated in 1.7 Prevention of Defendants Dissipating or Secreting Assets, the seizure orders are filed ex parte and it is always appropriate to attempt this prior to trial. Because the orders are ex parte, the current presiding judge is particularly attentive to the loyalty of the party requesting them. The presiding judge will refuse any such ex parte request once litigation has begun, because it is felt that an ex parte request in that event is disloyal if the other party is not informed. 

Victims of fraud often seek redress through the criminal process, becoming parties in the investigation, with access to the file. If they file a complaint with the investigating magistrate with constitution de partie civile, they will be required to deposit a bond, which will be established by the investigating magistrate and is usually not more than EUR15,000.

Participation in the criminal investigation does not prevent the same victim from initiating a civil lawsuit, which may then be suspended pending the outcome of the criminal investigation. 

The civil statute of limitations is suspended during the criminal investigation, but if the investigation does not result in the defendant being held over for a criminal trial, then it may be considered not to have tolled and there is a risk that any subsequent civil procedure will be time-barred. 

A civil trial will only consist of oral argument by respective counsel (and this will often be reduced to filing the written pleadings and supporting documentation without oral argument; this was particularly the case during the pandemic). There is no live testimony by the parties or witnesses in a civil trial. There is no possibility for a directed verdict where the defence is unmeritorious (or for a motion to dismiss a case where the complaint is unmeritorious or frivolous). The court may restrict the time available for oral argument if it considers the pleadings to have sufficiently addressed the issues. 

A judgment can be obtained if a defendant does not appear (by default), provided satisfactory efforts have been made to serve through the designated authorities under the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, or where the defendant does not continue in their defence once they have designated counsel. In this case, the judgment will be considered contradictory or adversarial. 

Members of the Monaco Bar, which is restricted to Monaco nationals, are expected to respect the truth and to exercise the profession with dignity, good conscience and loyalty (Article 14 of Law 1.0476 of 28 July 1982). Foreign lawyers pleading before the Monaco courts are expected to maintain the same standards in addition to the standards set out by their own Bars. French lawyers, for example, swear an oath to exercise the profession with “dignity, conscience, independence, probity and humanity”. There are no known or published cases of Monaco lawyers being sanctioned or disciplined for failing to respect these standards or any other violations, although malpractice suits are not entirely unknown. 

It is accepted practice that a defendant in a criminal case will seek to settle with a civil complainant, who will then withdraw the complaint. This will not end the criminal investigation, nor the possibility of the defendant being condemned, but will prevent the civil party from receiving damages or participating in the trial. Certain members of the Monaco Bar will file criminal complaints as a means of pressuring defendants or civil party victims in criminal cases. While this strategy is disliked by prosecutors and investigating magistrates alike, it does not always fail and has never been known to be sanctioned or result in disciplinary measures or prosecution.

It is possible to file a criminal complaint against X, as unknown parties, and this often occurs. One reason that this tactic is used is that it prevents the defendant from filing charges in calumnious denunciation if the criminal complaint fails. It is not possible to file a civil summons and complaint against an unknown party. 

The investigating magistrate in a criminal case may compel witnesses to give evidence for their own investigations.

In civil matters, Article 326 et seq of the CPC provide for the possibility of demanding an investigation and testimony, but this has not been known to have been put into practice. In any event, spouses, ex-spouses and children may not be compelled to testify, nor may anyone who is professionally bound by confidentiality.

The new Article 277 of the CPC provides that third parties may be compelled to produce documentation. 

Monaco is a signatory to the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters. 

A company or legal entity can be held liable for a crime or delict under the provisions of Article 4-4 of the Penal Code. The company’s responsibility does not preclude the responsibility of the directors or officers. The entity may therefore be held liable for the fraud to the victims in a criminal trial. 

In a civil case, the directors may be held responsible for their actions on behalf of the company. 

In criminal matters, the ultimate beneficial owners – having benefitted from the infractions – can be included along with a company and its directors and officers.

In civil cases, the legal personality of the company has been respected in case law where, for example, a claim is against an ultimate beneficial owner or shareholder, and an asset is held by the corporate vehicle. However, there has been a recent tendency towards allowing the seizure of the corporate asset on the basis that the corporate vehicle is a sham. In a recent case, the Court of Appeals refused to make a New York judgment rendered against a Panamanian company’s alleged beneficial owner enforceable against that company. However, in the separate action to validate the seizure order, the same Court of Appeals rendered a judgment against the Panamanian company for the same amounts (including punitive damages, which it is not possible to award in Monaco courts) awarded by the New York judgment. 

The shareholders of a company cannot act on behalf of that company to sue fraudulent directors, unless they are mandated to do so. They have standing as shareholders to sue the fraudulent directors both civilly as injured parties and by filing criminal complaints as victims. They could sue to have a judicial administrator named for the company, who could then sue the directors on behalf of the company.

While Monaco does not generally purport to exercise extraterritorial jurisdiction, overseas parties can be joined under the provisions of Article 5 of the Code of Private International Law (CDIP), which provides that Monaco has jurisdiction if one party is a Monaco resident, even where the other defendants are not. There is a caveat, which is that there will be no jurisdiction if the request is made “only to bring a party who has his habitual residence or domicile outside Monaco” into the Monaco courts. Since the CDIP is relatively recent (2017), no case law applying this exception has yet been published.

Where there is a seizure action, it must be validated before the Monaco courts by a simple action to request payment of the sum in question. In that case, the overseas party will be a party to the action and the Monaco court will have jurisdiction (Article 6, No 7, of the CDIP). 

To execute on the seized assets, it will often be necessary to demand recognition of a foreign judgment. In that event, “any interested party” may bring the action in recognition (Article 15 of the CDIP) and the defendant may be the overseas or foreign party. 

Parties outside of the jurisdiction can be served by instructing a bailiff to file the summons or decision with the prosecutor general’s office, under the provisions of the Convention on the Services Abroad of Judicial Documents in Civil or Commercial matters of 15 November 1965.  No leave of the court is required for service abroad. 

Enforcement can be obtained in civil matters by obtaining a final judgment (or a judgment with provisional execution, regardless of appeal) from the Monaco court. Only a bailiff may execute judgments. These may be executed against previously seized assets or any other assets of the debtor. 

The foreign judgment that has received recognition from the Monaco court may also be enforced. The CDIP stipulates that foreign judgments are to be enforced unless it is shown that:

• the foreign court did not have jurisdiction under Monaco legislation;
• the defendant did not have notice and an opportunity to defend;
• recognition of the foreign judgment would be manifestly contrary to Monaco public order;
• the foreign judgment is contrary to a decision rendered between the same parties in the Principality or by a foreign court and recognised in the Principality; and
• litigation is pending in Monaco between the same parties and on the same matter in the Principality that was filed first. 

The Monaco court may not modify the foreign judgment. 

A defendant in a criminal investigation is entitled not to reply, but a negative inference will be drawn from the non-co-operation, during both the investigation and the trial. 

The new CPC provisions allowing for discovery orders have not yet produced published case law. Because they may be accompanied by a fine, or an astreinte, these can be expected to give rise to litigation. Banks served with orders to disclose “any accounts” held by a debtor have been known to refuse, citing banking secrecy, but in a recent case, where the debtor’s personal account had been shown to be nearly empty, the Court issued such an order, and the bank complied. The debtor is now suing to quash the order, although the information allowed seizure of funds. If a Monaco lawyer or a foreign practitioner were served with an order to disclose (compulsoire), the lawyer would refuse to comply. 

In criminal cases, the privilege is strongly debated in France and has been raised in Monaco in a recent case in which information was obtained from the telephone of a foreign lawyer practising in Monaco. The principle would be similar to the common fraud exemption known in the common law. 

There are no punitive or exemplary damages in Monaco. 

Banking secrecy rules apply in civil cases. Article 308 of the Penal Code makes it a criminal violation for anyone who has received information in confidence to divulge it. Banking secrecy cannot be opposed in a criminal investigation, but has been raised by a third-party bank served with a civil court order to produce information. 

Crypto-assets would be treated in the same way as any other assets, but it would be particularly difficult to obtain a seizure order. Legislation enacted in 2022 more precisely defines the legal framework applicable to crypto-assets, and provisions of services relating to them.