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Money Laundering in Monaco: The Fight Against Financial Crime
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Monaco has launched a series of reforms to strengthen its anti-money laundering system, aiming to avoid being labeled as a haven for financial criminals. The tiny principality’s authorities are under pressure to make significant improvements after a scathing report by Moneyval, a Council of Europe body tasked with assessing the effectiveness of anti-money laundering measures.
Register of Beneficial Owners
The Register of Beneficial Owners of Monégasque companies has been swamped with directors seeking to list their true owners behind possible frontmen. This exercise is designed to increase transparency and prevent money laundering, but some business leaders have expressed frustration at the level of detail required.
- “Now we want to know how you comb your hair in the morning and your shoe size,” complained one director.
Implementing Moneyval’s Recommendations
Monaco’s authorities are racing against time to implement Moneyval’s recommendations before a 12-month observation period ends in 2024. The Financial Action Task Force (FATF) will then decide whether Monaco has made sufficient progress to avoid being placed on the “grey list” of countries considered deficient in their fight against money laundering.
Threats and Vulnerabilities
The threat is real, as Monaco’s international profile and reputation as a financial center are under scrutiny. Moneyval’s report highlighted several deficiencies, including:
- Lack of a proper risk analysis
- Weaknesses in its anti-money laundering measures
Monaco has been identified as a prime target for suspect financial flows due to its banking and financial services.
Recent Example: Concealment of Russian Assets
A recent example of Monaco’s vulnerability is the concealment of Russian assets since Russia’s invasion of Ukraine. Criminals have long targeted Monaco as a place to launder the proceeds of tax fraud, embezzlement, and corruption.
Government Response
Monaco’s government has vowed to implement Moneyval’s recommendations to ensure compliance with international standards. The outcome will be decisive in determining whether the principality can maintain its reputation as a major financial center or risk being downgraded alongside countries like the United Arab Emirates, Gibraltar, and Bulgaria.
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