Financial Crime World

EU Regulators Issue Warning on Money Laundering Risks in Economic Ties with Monaco, San Marino, and Andorra

By Stephen Rae

EU’s Concerns over Money Laundering Risks in Economic Ties with Monaco, San Marino, and Andorra

Amidst plans for closer economic ties between the European Union (EU) and Monaco, San Marino, and Andorra, top EU financial regulators have issued a warning against the potential increase in money laundering risks.

  • European Banking Authority (EBA) Chair, José Manuel Campa, raised concerns over the lack of transparency and adequate anti-money laundering (AML) frameworks in these jurisdictions.
  • EU officials emphasized the need for these countries to implement effective AML measures and meet international standards before economic relations could be further strengthened.

Concerns over Monaco’s AML Frameworks

Monaco, a world-famous tax haven, has faced international scrutiny for its banking sector’s role in money laundering:

  • In 2019, a leaked document warned Monaco over its inadequate AML controls.
  • Subsequent investigations revealed that Monaco had failed to implement recommended reforms, leading to ongoing concerns.

Accusations against San Marino and Andorra

San Marino and Andorra have faced accusations of being tax havens and money laundering hotspots:

  • Europe’s finance ministers expressed their dissatisfaction over Andorra’s lack of progress in adhering to EU tax transparency rules.

Importance of Increasing Transparency and Addressing Money Laundering Risks

EU Commission’s Directorate-General for Financial Stability, Financial Services, and Capital Markets Union, Mairead McGuinness, highlighted the importance of increasing transparency and addressing the money laundering risks in these jurisdictions:

  • In the context of the EU’s pursuit of closer economic ties.

EU’s Broader Efforts to Strengthen AML Framework

This issue comes amidst broader efforts to strengthen the EU’s AML framework and counter the threats of money laundering and financial crimes:

  • The European Commission is proposing a new legislative package on AML.
  • The proposed measures include tighter controls on virtual assets, improved information-sharing between national authorities, and increased powers to investigate and prosecute financial crimes.