Title: Monaco’s Financial Sector under Scrutiny: MONEYVAL Report Reveals Money Laundering Vulnerabilities

Key Findings: A Hidden Haven for Money Laundering

Monaco’s financial sector is under international scrutiny following a damning report by the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) [1].
Monaco’s position as an internationally oriented financial hub makes it a prime target for illicit cross-border financial flows [2].
Most crimes are committed abroad, but their proceeds are laundered within the country [2].

Monaco faces significant risks from fraud and corruption, but risk analyses in these areas are inadequate [3].
Income tax evasion, a significant source of illicit funds, is not a criminalized act, and no thorough risk analysis has been conducted in this area [3].

Monaco faces notable shortcomings in its supervision of financial institutions and non-financial businesses [3].
Sectors such as real estate agents, property dealers, and private banking firms, which face minimal formal regulation, represent high-risk financial fraud profiles but lack adequate supervision mechanisms [3].

The report raises serious concerns regarding the effectiveness of Monaco’s investigations, prosecutions, and sanctions processes [3].
Money laundering cases often go unidentified, and investigations take years to complete, limiting Monaco’s capacity to handle complex financial frauds [3].

To address these shortcomings, the report advises Monaco to intensify its efforts in risk-based supervision and introduce guidelines for wealth management and private banking firms [4].
Substantial improvements in response times and a review of domestic legislation to limit appeal time frames are also vital [4].

Monaco is bracing for a one-year observation period following the report’s approval at the FATF plenary on 20 February [5].
Should the necessary reforms not materialize within this timeframe, the Principality risks being publicly ‘grey-listed’, as was the case in 2009 [5].

The Monaco government has assured EURACTIV of its commitment to implementing the report’s recommendations quickly to align with international standards [5].
The authorities have been working on legislative reforms since April 2022 to address priority concerns, particularly within the non-financial business sector [5].