Financial Crime World

Title: Monaco Under Scrutiny: MONEYVAL Report Highlights Major Flaws in Principality’s Financial Crimes Fight

MONEYVAL’s Concerns about Monaco’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) Efforts

On 23 January 2023, MONEYVAL published Monaco’s fifth-round evaluation report following an on-site visit in March 2022. The report highlighted significant improvements needed in Monaco’s efforts to prevent and combat money laundering and terrorism financing (ML/TF).

Significant Areas of Concern

Monaco falls into the moderate effectiveness category in several areas:

  1. Understanding of ML/TF risk: Monaco needs to enhance its risk assessment strategy.
  2. International cooperation: More cooperation with foreign financial intelligence units is required.
  3. Transparency of legal persons: The lack of transparency in legal persons is a major concern.
  4. Effectiveness of supervision: The effectiveness of supervision needs improvement.
  5. ML investigations and prosecutions: The volume of ML investigations and prosecutions remains low.
  6. Confiscation of proceeds of crime: The application of confiscation orders is limited.
  7. Use of financial intelligence: The Monegasque Financial Intelligence Unit (SICCFIN) needs more resources to optimally utilize their analyses.
  8. Application of UN targeted financial sanctions on terrorism financing and proliferation financing (TFS): Delays in transposition have impacted their effectiveness.

Pressing Issues

The most pressing issues include:

  1. Lack of transparency in legal persons: Monaco needs to take more action to address this issue.
  2. Limited effectiveness of supervision: Monaco’s supervision efforts need improvement.
  3. Limited number of ML investigations and prosecutions: Monaco needs to address complex cases and focus on foreign proceeds or third-party ML.

Insufficient Human and Technical Resources for SICCFIN

SICCFIN’s ability to generate high-quality analyses is notable, but they lack sufficient human and technical resources and their analyses are not optimally utilized by investigative authorities.

Areas for Improvement

Casinos, Company Services Providers, Trusts, Virtual Assets, Organized Crime, and External ML Threats

There is room for improvement in sectors such as:

  • Casinos
  • Company services providers
  • Trusts
  • Virtual assets
  • Organized crime
  • External ML threats

Monaco has taken steps to identify ML/TF risks in these areas, but further action is required to effectively address them.

Private Sector Strides but Deficiencies in STR Origination

The private sector has made some strides in implementing AML/CFT measures, but there are deficiencies in the number and quality of Suspicious Transaction Reports (STRs) originating from the banking sector and other at-risk sectors like casinos and jewelers.

Low Volume of ML/TF Investigations, Prosecutions, and Convictions

Insufficient ML Investigations, Prosecutions, and Convictions

The volume of ML investigations, prosecutions, and convictions remains low. Monaco’s efforts focus on cases that are consistent with its risk profile and fail to tackle ML committed by third parties or foreign proceeds.

Ineffective Sanctions

The sanctions in place serve as a deterrent but do not appear to be effective in preventing ML or TF.

Recommendations for Improvement

Obtain Better Information on Beneficial Ownership

Monaco must strive to obtain better information on beneficial ownership.

Apply More Effective Mitigating Measures

Monaco should apply more effective mitigating measures to reduce ML/TF risks.

More efforts are required to strengthen international cooperation, address legislative obstacles, and reform the extradition process. Monaco needs to impose sanctions that are dissuasive for high-risk legal persons and non-profit organizations.