EU Regulators Warn of Money Laundering Risks in Deepening Relationships with Andorra, Monaco, and San Marino

European Banking Authority Issues Stark Warning to European Commission

Brussels, Belgium - The European Banking Authority (EBA), along with the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA), have raised concerns about the money laundering risks associated with closer financial relationships with Andorra, Monaco, and San Marino.

• Joint Letter from European Supervisory Authorities (ESAs)
  • Chair of the EBA, José Manuel Campa, and his counterparts at EIOPA and ESMA, issued a joint letter to the European Commission.
  • The ESAs expressed concerns about the potential entry of illegal money into the European Union and predatory financial firms targeting consumers.
  • The three tiny states were described as having historically maintained less rigorous financial regulations and being prone to money laundering and other illicit activities.

Monaco’s Anti-Financial Crime Defenses under Scrutiny

• Council of Europe’s Moneyval Evaluation
  • Monaco received a scathing evaluation from the Council of Europe’s Moneyval earlier this year.
  • Deficiencies were found in nearly every basic tenet required for a robust AML and CFT regime, including Beneficial Ownership, Suspicious Transaction Reports, staffing, and the criminal justice system.
  • Monaco, known as a popular destination for casinos, banks, and wealthy individuals, has long been considered a money laundering haven.

Potential Consequences of Ignoring the Warnings

• Financial Harm to EU Consumers
  • Disregarding these concerns could result in financial harm to EU consumers.
  • The trade talks may also be derailed if the Commission does not adequately address these issues.
• Plans for Greater Economic Ties at Risk
  • The three nations have been negotiating on greater economic ties with the EU.
  • The recent warnings from the ESAs could impede the Commission’s plans to conclude ambitious goals, such as removing trade obstacles and allowing free movement.

Andorra, Monaco, and San Marino Respond

• Defending Their Records
  • The three nations have defended their records and insisted that past issues had “nothing to do with the virtuous process undertaken by the three states.”
• Commission Reply
  • The Commission replied to their concerns but did not provide further comment.

Weighing the Financial Benefits Against the Risks

• Battle Against Financial Crime and Money Laundering
  • The EU will need to consider the potential financial benefits against the risks associated with deepening relationships with these countries.
  • The ongoing battle against financial crime and money laundering continues to be a top priority for the EU.

Quote from Dutch MEP Paul Tang

“Proper scrutiny and safeguards are essential to ensure we don’t let any Trojan horse through our gates.” - Dutch MEP Paul Tang