EU Warns of Money Laundering Risks in Economic Ties Deal with Monaco, San Marino, and Andorra

The European Union (EU) is negotiating closer economic ties with Monaco, San Marino, and Andorra, but the EU’s top financial regulators have issued a stern warning about the potential money laundering risks.

EU’s Concerns over Economic Partnerships with Microstates

José Manuel Campa, Chair of the European Banking Authority (EBA), has raised concerns over possible money laundering vulnerabilities in transactions between the EU and these countries. The EU’s closer economic partnerships could include financial institutions access and cross-border payments.

Increasing Efforts to Combat Financial Crimes

This warning comes as part of the EU’s increasing efforts to crack down on financial crimes within the EU and beyond. The European Commission’s action plan against money laundering and terrorist financing entered into force this summer. The plan aims to create a stronger EU Financial Intelligence Units Network and enhance cooperation with other international organizations.

Moneyval’s Role in Evaluating Money Laundering Risks

Monaco, San Marino, and Andorra are well-known for their financial secrecy and attractiveness to wealthy individuals and multinational corporations. Their financial sectors have historically lacked transparency, making them attractive locations for illicit financial activities.

The EU’s regulatory authorities have been pushing for greater information sharing and cooperation to mitigate these risks. Previously, the European Commission identified Moneyval, the Council of Europe’s anti-money laundering and counter-terrorist financing evaluator, as a key partner in assessing the risks posed by these countries. Moneyval’s evaluations have often flagged significant issues in their anti-money laundering and counter-terrorist financing frameworks.

Protection of EU Financial System and International Commitment

As the EU works towards establishing closer economic ties with Monaco, San Marino, and Andorra, it remains vital to ensure that anti-money laundering and counter-terrorist financing safeguards are in place. This will not only protect the EU financial system from potential threats, but also uphold its commitment to international efforts to combat financial crimes.

Strengthening EU’s AML/CFT Framework

The EU is currently developing a new regulation on anti-money laundering and counter-terrorist financing, which is expected to include measures to strengthen the EU’s AML/CFT framework and improve cooperation between EU member states and third countries. The regulation is expected to be tabled sometime in 2023.