Monaco Faces Prospect of Grey Listing Over Money Laundering Concerns

Financial Action Task Force (FATF) to Announce Decision on June 28

The Financial Action Task Force (FATF), an intergovernmental organization responsible for setting regulatory standards to protect financial systems, is expected to announce its decision regarding Monaco’s efforts to combat money laundering. The country faces the prospect of being added to a “grey list” of countries deemed insufficient in their efforts to combat money laundering.

Background and Concerns

A scathing report from European inspectors earlier this year highlighted Monaco’s failure to adequately prosecute money laundering cases. According to the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (Moneyval), Monaco’s authorities are hindered by a lack of information and investigation into financial crimes.

Why Monaco is Vulnerable

As one of the wealthiest countries in the world, Monaco is particularly vulnerable to financial threats due to its high concentration of millionaires and billionaires. The principality’s luxury housing market and opulent casinos also make it an attractive target for suspect financial flows.

• Monaco’s international profile, fueled by its banking and financial services sector, makes it a prime destination for criminal funds.
• In most cases, the predicate offense is committed abroad, with the proceeds of crime laundered in Monaco, often originating from neighboring jurisdictions such as France and Italy.

Consequences of Grey Listing

If added to the grey list, Monaco can expect increased regulatory scrutiny and potentially harm to its economy. The country will be subject to greater oversight, and some investors may reconsider doing business in a listed country.

• The United Arab Emirates faced similar consequences after being added to the grey list in 2022, prompting Emirati officials to prioritize reforms.
• The UAE’s subsequent removal from the list earlier this year was reportedly due to efforts to address financial offenses, including allowing other countries to more easily extradite individuals accused of white-collar crime.

Monaco’s Response

Monaco may take a cue from the UAE’s example as it seeks to avoid being added to the grey list and maintain its reputation as a secure and attractive destination for international investment. By addressing financial offenses and prioritizing reform, Monaco can demonstrate its commitment to combating money laundering and maintaining its economic stability.