Financial Crime World

MONACO UNDER SCRUTINY: Financial Crime Data Analysis Reveals Key Vulnerabilities in Money Laundering Measures

Introduction

A recent report by the Council of Europe has shed light on significant vulnerabilities in Monaco’s measures against money laundering, putting the country at risk of being scrutinized intensely by the international Financial Action Task Force (FATF) watchdog.

Vulnerabilities in Money Laundering Measures

According to the report, Monaco faces substantial money laundering risks due to its “internationally oriented financial activities” and is a prime target for illicit cross-border financial flows. The report also found that in most cases, frauds are committed abroad while the proceeds of crime are laundered in Monaco.

Risks and Concerns

  • Risk analyses, international cooperation, and the dissuasiveness of sanctions are not fully effective in addressing fraud and corruption risks.
  • Terrorism financing risks were found to be relatively low, but require more in-depth analysis by Monégasque authorities.
  • The report highlights uneven supervision of financial institutions and non-financial businesses, inadequate investigations and prosecutions, and obstacles to international cooperation.

Scrutiny of Monaco’s Financial Industry

Monaco’s financial industry has recently come under scrutiny for allegedly protecting the fortunes of Russian oligarchs before aligning with international sanctions against Russia. The report shines a renewed spotlight on Monaco and its financial industry.

Recommendations for Reform

The report recommends implementing a risk-based supervision approach, introducing guidelines for wealth management and private banking firms to ensure greater compliance with the country’s supervisory framework.

Next Steps

Monaco is due to enter a one-year observation period after the report goes to FATF plenary on February 20. Should structural reforms not be implemented during this period, Monaco risks being named and shamed in a public ‘grey list’.

Conclusion

The Council of Europe’s report highlights significant vulnerabilities in Monaco’s money laundering measures, putting the country at risk of intense scrutiny by the international community. It is imperative that Monaco implements structural reforms to address these concerns and ensure greater compliance with international standards.