Monaco Added to Money Laundering Watchlist Despite Progress

Monaco has been placed on a “grey list” of countries subject to increased monitoring by the Financial Action Task Force (FATF), despite making significant progress in its fight against money laundering. This decision was made at the FATF’s plenary meeting in Singapore, where Venezuela was also added to the list of nations considered to have “strategic deficiencies” in countering money laundering and terrorist financing.

FATF Report Highlights Progress

According to the FATF report, Monaco has made notable strides on several fronts, including:

• Establishment of a new combined financial intelligence unit (FIU): A single entity responsible for collecting and analyzing financial information.
• Anti-money laundering/combating the financing of terrorism (AML/CFT) supervisor: Strengthened oversight to ensure effective implementation of AML/CFT measures.
• Improved approach to detecting and investigating terrorism financing: Enhanced efforts to prevent the misuse of financial systems for terrorist purposes.
• Targeted financial sanctions: Measures taken to freeze assets and impose travel bans on individuals and entities involved in terrorist activities or money laundering.
• Risk-based supervision of non-profit organizations: Regular monitoring of non-profits to ensure they are not being used to facilitate illegal activities.

Areas for Improvement

Despite this progress, the FATF identified several areas where Monaco must make further improvements, particularly with regard to:

• Money laundering and tax fraud committed abroad: The country needs to strengthen its understanding of risk related to foreign income tax fraud, increase requests for international cooperation, and enhance sanctions for AML/CFT breaches.
• Six outstanding issues: Monaco will need to work with the FATF to address these issues within agreed timeframes.

Response to Previous Criticism

The move comes after Monaco was criticized by the Council of Europe’s anti-money laundering body Moneyval in January 2023. In response, nine new laws were passed by Monaco’s parliament to strengthen its financial security authority and anti-money laundering legal arsenal.

Commitment to Implementation

Despite this setback, Monaco remains committed to implementing an Action Plan to resolve the identified strategic deficiencies within agreed timeframes.