Financial Crime World

Monaco Risking Financial Blacklist Over Money Laundering Concerns

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A recent report from the Council of Europe has highlighted significant vulnerabilities in Monaco’s measures against money laundering, putting the principality at risk of being placed on a grey list by the Financial Action Task Force (FATF) watchdog.

The Report’s Findings

The report reveals that Monaco faces substantial money laundering risks due to its internationally oriented financial activities and lack of effective supervision. The country’s financial industry is a prime target for illicit cross-border financial flows, with frauds often committed abroad and proceeds laundered in Monaco.

Key Areas of Concern

Uneven Supervision

  • Monaco’s supervision of financial institutions and non-financial businesses, such as real estate agents and private banking firms, is deemed inadequate.
  • These sectors are high-risk for financial fraud, but no adequate system has been implemented to address this issue.

Inadequate Risk Analysis

  • The report highlights the need for Monaco to improve its risk analysis capabilities to identify and mitigate money laundering threats.

Insufficient Sanctions

  • The country’s sanctions regime is considered insufficient, allowing money launderers to operate with impunity.

Consequences of Failure

The report’s findings suggest that Monaco’s Anti-Money Laundering (AML) system is ineffective in identifying and prosecuting money laundering cases. Only six convictions were handed down between 2017 and 2021, despite recent legislative developments aimed at speeding up the process.

If Monaco fails to implement structural reforms within the next year, it risks being placed on the grey list by FATF as early as mid-2024. This could have severe consequences for the country’s financial reputation and economy.

Comparison with Other Countries

Countries that have been grey listed in the past include:

  • Albania
  • Barbados
  • Gibraltar
  • Morocco
  • Panama

Monaco was previously included in the OECD’s “Uncooperative Tax Havens” list until 2009.

The Monegasque Government’s Response

The Monegasque government has promised to implement the report’s recommendations quickly. However, time is of the essence, and Monaco must act swiftly to address its structural deficiencies and avoid being placed on the grey list.