Financial Crime World

MONACO FACES RISK OF GREY-LISTING AS COUNCIL OF EUROPE REPORT RAISES CONCERNS OVER MONEY LAUNDERING AND FINANCIAL COMPLIANCE

A recent report by the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) has highlighted significant vulnerabilities in Monaco’s measures against money laundering, putting the country at risk of being placed under intense scrutiny by the international Financial Action Task Force (FATF) watchdog.

Vulnerabilities Exposed

The report warns that Monaco faces significant money laundering risks due to its “internationally oriented financial activities” and is a prime target for illicit cross-border financial flows. The report notes that frauds are often committed abroad, with the proceeds of crime being laundered in Monaco.

Risk-Based Approach Criticized

  • Monaco’s risk-based approach to compliance has been criticized as uneven, with not all risks having been effectively accounted for.
  • The country needs improved supervision of financial institutions and non-financial businesses such as real estate agents and private banking firms, which are found to be high-risk profiles.

Inadequate Investigations and Prosecutions

  • Investigations and prosecutions related to money laundering are inadequate, with many cases failing to be identified by authorities in the first place.
  • The report also notes that the speed of investigations is slow, with some lasting up to 10 years.

Government Response

The Monegasque government has acknowledged the report’s findings and has vowed to implement structural reforms to address these concerns. However, should Monaco fail to make significant progress, it risks being named and shamed on a public “grey list” by the FATF in mid-2024.

One-Year Observation Period

Monaco is currently due to enter a one-year observation period after the report goes to FATF plenary on 20 February. During this period, the Monegasque authorities will work with the FATF to address structural deficiencies and prevent being placed on the grey list.

By addressing these concerns, Monaco can avoid being placed on the grey list and maintain its reputation as a financially stable and compliant jurisdiction.