Financial Crime World

Monaco Cracks Down on Financial Crime and Terrorism Funding

Monaco, the glamorous European microstate known for its casinos and luxury yachts, is taking robust measures to combat money laundering and terrorist financing in its financial system. According to the latest Mutual Evaluation Report from the Council of Europe’s Moneyval Committee, Monaco is committed to improving its compliance with the Financial Action Task Force (FATF)’s 40 Recommendations against financial crimes.

Significant Progress since the Last Evaluation in 2015

The assessment, conducted between February 21 and March 4, 2022, presents a comprehensive review of Monaco’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) system’s effectiveness. According to the report:

  1. Significant progress has been made since Monaco’s last evaluation in 2015.
  2. The government has addressed several deficiencies identified by FATF in Monaco’s legal framework.
  3. Monaco’s financial institutions are now required to follow stricter customer due diligence measures.

Strengthening Customer Due Diligence Measures

Monaco’s financial institutions must now:

  • Verify the identity of their clients.
  • Conduct risk assessments.
  • Report any suspicious transactions to the authorities.

These regulations aim to help prevent financial crimes and terrorist financing activities.

Enhanced Law Enforcement Agencies

Monaco’s law enforcement agencies have stepped up their efforts:

  • They are better equipped.
  • They have improved their ability to investigate and prosecute cases of money laundering and terrorist financing.

The Financial Analysis Unit (FAU)

  • The FAU of the Judicial Police is responsible for collecting and analyzing financial intelligence.
  • The FAU has reported an increase in the number of suspicious transaction reports it receives and handles.

Greater Transparency in Monaco’s Financial Sector

Monaco is no longer considered a tax haven. Monaco’s financial institutions are subject to the European Union’s Anti-Money Laundering Directive. Monaco is also a signatory to several international treaties and agreements designed to curb financial crimes and terrorist financing.

Remaining Challenges

The report notes that Monaco still faces certain challenges:

  • Its small size and reliance on the financial sector make it vulnerable to money laundering and terrorist financing risks.

To mitigate these risks effectively, Monaco needs to:

  • Continue to invest in its regulatory framework.
  • Enhance its institutional capacity.
  • Maintain a strong cooperation with neighboring countries and international partners.

FATF’s Expectations

The FATF is expected to conduct a follow-up assessment of Monaco’s AML/CFT system in 2025 to review its progress in addressing the remaining deficiencies identified in the latest report.