Understanding the meaning of deposit
If you relocate to the Principality of Monaco based on your wealth and without working in a Monaco-based company, there is a highly important step you need to take; this is the opening amount, or as many banks refer to it, the security deposit.
It is a common standard that the banks and wealth managers in Monaco will require a form of deposit to secure your financial status for residency. This bank deposit is usually the amount you need for your residence permit, normally anything between 500,000 and 1 million Euro.
However, what many banks do not make clear is that this deposit amount cannot be accessed during your residency. They simply expect you to understand the “small text” in your contract, and since you need to wait at least 10 years before you can apply for a permanent residence permit, it means that your bank deposit cannot be touched for at least 10 years, except if you decide to leave Monaco.
Therefore, if you open a bank account with 500,000 Euro, you most likely cannot access this amount during the period of your residency. It is like a form of guarantee.
In practical reality, if one rents out an apartment for 10,000 Euro a month, then he/she needs the 500,000 Euro bank deposit as well. Financially, the opening amount the bank will be looking for is 620,000 Euro for the first year, (500,000 Euro as deposit and proof of 120,000 Euro for the annual rent). This is the point where choosing the right bank is crucial.
In addition, some contracts contain a clause stating that you automatically approve that during your residency the bank can manage, use, and reinvest your deposit without limitations. It goes without saying, that by allowing the bank to reinvest your security fund, it is not guaranteed that you will see that amount back.
The problem with these types of bank contracts is that if the bank loses your deposit, then you will be asked to top it up at least to the original amount, or you might lose your residence permit. This is because the bank may not guarantee the requested statement for you anymore.
What is interesting but not commonly known is that you always have the power to negotiate your own conditions before opening a bank account. Therefore, if you aim to be a long-term resident in the Principality of Monaco, be very cautious with your banking and wealth management contracts.
Ask for independent and professional help to avoid some expensive surprises.
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