Monaco’s AML System under Scrutiny: EU watchdog warns of “name-and-shame” threat

EU’s concerns over Monaco’s AML/CFT framework

The European Union’s Anti-Money Laundering (AML) watchdog, Europol’s European Money Laundering Authority (EMLA), has criticized Monaco’s AML/CFT framework, raising concerns over the risk of reputational damage through the EU’s “name-and-shame” mechanism.

Subhead: European Union’s assessment of Monaco’s AML/CFT framework

The EUFIU report expresses serious concerns over Monaco’s AML/CFT framework
Monaco’s system poses a potential risk to the EU’s financial security
Monaco could face reputational damage as a result of the EU’s “name-and-shame” mechanism

Monaco under the radar for money laundering activities

Monaco, known for its glamorous lifestyle and offshore financial services, has long been under the radar for money laundering activities.

Subhead: History of Monaco’s assessment

Monaco has been subject to increased scrutiny by Moneyval since 2011
Following a 2018 assessment, critical areas of concern were identified
Lack of adequate risk assessment of businesses and professionals

Challenges and recommendations

The report highlights Monaco’s limited resources and lack of an independent regulatory body as key challenges.

Subhead: Addressing the challenges

Strengthening cooperation between Monaco’s financial intelligence unit and European counterparts
Improving information sharing and coordination

Reputational risk and potential consequences

The EU’s “name-and-shame” mechanism entails publicly disclosing jurisdictions with inadequate AML/CFT frameworks. Monaco is currently rated as a “low” risk jurisdiction, but there are concerns that the EUFIU report could lead to an unfavorable outcome.

Subhead: Impact of the rating

Monaco may face reputational damage and decreased attractiveness to international investors
Ongoing global push to strengthen AML/CFT frameworks
Monaco must address the concerns and invest in significant changes to meet evolving regulatory demands