Monaco Faces Financial Crime Threat: Government Rallies Against “Grey List” Designation

Strengthening Anti-Money Laundering Measures

In an effort to maintain its status as an international financial center, Monaco has launched a series of reforms aimed at strengthening its anti-money laundering system. The principality is under threat of being downgraded from its current status due to concerns over money laundering and terrorist financing.

Moneyval Report Highlights Deficiencies

A recent report by Moneyval, a Council of Europe body responsible for assessing compliance with anti-money laundering measures, has identified “deficiencies,” “weaknesses,” and “shortcomings” in Monaco’s risk analysis and financial regulation. The report highlights the need for Monaco to improve its system to avoid being labeled as a haven for financial crime.

Monaco’s International Profile Makes it a Prime Target

Monaco’s international profile as a banking and financial services hub makes it a prime target for suspect financial flows. Criminals often use the principality to launder proceeds from tax fraud, embezzlement, and corruption. A recent example is the concealment of Russian assets in Monaco since Russia’s invasion of Ukraine.

Government Vows to Implement Recommendations

The government has vowed to implement Moneyval’s recommendations to comply with the most demanding international standards. A 12-month observation period has begun, during which Monaco must demonstrate its efforts to avoid being placed on the “grey list” of jurisdictions subject to enhanced surveillance.

FATF Decision in 2024

The decision will be made in 2024 by the Financial Action Task Force (FATF), a body responsible for combating money laundering and terrorist financing. If Monaco fails to comply with international standards, it risks facing reputational damage and potential economic consequences.

Transparency Exercise Underway

With the stakes high, Monaco is working to revamp its anti-money laundering system. As part of this effort, the government is listing the true owners of companies behind possible frontmen as part of a transparency exercise. While this initiative has led to some complaints from company directors, authorities are determined to avoid being labeled as a haven for financial crime.

Key Takeaways

• Monaco is under threat of being downgraded from its current status due to concerns over money laundering and terrorist financing.
• The government has launched a series of reforms aimed at strengthening its anti-money laundering system.
• A 12-month observation period has begun, during which Monaco must demonstrate its efforts to avoid being placed on the “grey list” of jurisdictions subject to enhanced surveillance.
• The decision will be made in 2024 by the Financial Action Task Force (FATF).
• Monaco is working to revamp its anti-money laundering system through a transparency exercise.