The term “financial education” is beginning to be used regularly in the Principality of Monaco by industry professionals and teachers to support regulators, whether with a view to ensuring the protection of savings or to enable the introduction of governance and compliance rules within institutions.
The topic of financial education is both a legal and a pragmatic one.
This is demonstrated in several recent acts relating to financial activities or financial products: Act No. 1.338, dated 7 September 2007, as amended in December 2021; Act No. 1.339, dated 7 September 2007, amended, relating to mutual funds and investment funds; and Act 1.491, dated 26 June 2020, relating to token offerings. The scope of activities and products is becoming more diversified, there are more stakeholders, and a variety of regulators are involved (the Ministry of State, the Financial Activities Supervisory Commission (CCAF), the Commission on Token Offerings).
However, the issue of financial education is also a part of governance and compliance for the purposes of combating money laundering.
Recent changes to the provisions of Act No. 1.520 dated 11 February 2022, amending the original legislation contained in Act No. 1.362, dated 3 August 2009, relating to efforts to combat money laundering, terrorist financing and corruption, offer a good example.
(1) Financial education goes together with improving expertise and skills, and with raising awareness across all fields
For example, the Act on combating money laundering contains several references to awareness of the risks associated with money laundering operations among staff in the affected institutions, the list of which continues to grow.
It is about “educating”, to adopt the term used in the Act (article 30), about developing a capacity for judgement and critical thinking. This is precisely the role of financial education.
As another example, expertise and the acquisition of knowledge, experience, and the “fitness and properness” of managers are all inseparable from the application for approval to be submitted to the financial regulator, the CCAF.
(2) Dedicated continuing education activities must be developed in the field of financial education
Training activities are not just annual, they must be ongoing.
The Act on combating money laundering established the principle of continuing education for staff in house, while allowing flexibility for each professional affected to define the relevant procedures. In any case, it is, of course, in practical situations that this training should take place, using examples that help with prevention and raising the alarm internally.
(3) So what are the prospects? The trends? It would appear that the stage is set for an institutionalisation of financial education
Industry stakeholders have been involved in this financial education movement for a very long time.
Training for the general public could draw inspiration from the experience of our neighbouring country, which has set up an Institute for Financial Education in partnership with the various financial and banking regulators.
All of these developments demonstrate that legal certainty and the attractiveness of the financial industry are inseparable from the development of financial education for industry professionals and clients.