Financial Crime World

Monaco’s Financial Sector Needs Improvement in Anti-Money Laundering Efforts

A recent evaluation has highlighted several shortcomings in Monaco’s anti-money laundering (AML) and combating the financing of terrorism (CFT) measures. While the principality has made some progress, there is still much work to be done to ensure that its financial sector is adequately protected against these threats.

Internal AML/CFT Procedures

  • Financial institutions need to develop internal AML/CFT procedures, policies, and controls.
  • The authorities have recommended guidelines, but they need to be further detailed in law or regulation to ensure compliance.

Prudential Supervision of Monégasque Credit Institutions

  • The French Banking Commission has oversight responsibilities, but this needs to be strengthened significantly, particularly with regards to AML/CFT measures.
  • Insufficient prudential supervision raises concerns about the effectiveness of monitoring measures.

Inspections and Monitoring

  • The low inspection rate casts doubt on the effectiveness of monitoring measures.
  • It is recommended that SICCFIN’s supervision section be supplemented and that the list of financial institutions subject to AML/CFT monitoring be reviewed to include mutual fund management companies.

Sanctions and Penalties

  • The system of sanctions is incomplete, with an insufficiently graduated scale of administrative sanctions and no pecuniary administrative sanctions available.
  • Criminal sanctions can be imposed on senior managers and employees of financial institutions, but these do not cover all statutory AML/CFT obligations.

Money Transfer Services

  • There are no specific provisions laying down the conditions for money transfer services in Monaco.
  • It is recommended that explicit legal conditions be provided for this industry and that a competent licensing or registration authority be designated.

Designated Non-Financial Businesses and Professions (DNFBPs)

  • DNFBPs, including lawyers, Company Service Providers (CSPs), trustees, gaming houses, and other DNFBPs, are not subject to specific requirements or customer identification and transaction record-keeping obligations.
  • AML/CFT requirements need to be applied more effectively to these businesses.

Enforcement Measures

  • The lack of enforcement measures and sanctions available against financial institutions, CSPs, and trustees is a concern.
  • In some cases, sanctioning is only possible for breaches of STR (Suspicious Transaction Report) requirements, which may not be sufficient to deter non-compliance.

Conclusion

Monaco’s financial sector needs significant improvement in its AML/CFT efforts to prevent money laundering and terrorist financing. The authorities must take concrete steps to address these deficiencies and ensure that the principality’s financial institutions are adequately protected against these threats.