Monaco Cracks Down on Financial Crime: A Race Against Time to Avoid “Grey List” Status

Monaco, the glamorous European principality renowned for its lucrative financial sector, is under international scrutiny for its insufficient measures to combat financial crimes. The tiny state is taking bold steps to beef up its anti-money laundering (AML) systems and avoid being labeled as “deficient” by regulatory bodies.

Transparency Push at the Registre des Bénéficiaires Légaux de Monaco (RBL)

Since late 2022, Monaco’s business landscape has seen intense activity at the RBL, the register responsible for recording the true owners of Monégasque companies. During a December 2023 visit, a company director remarked, “It’s all smooth sailing today.” However, this additional layer of scrutiny has not pleased everyone. One director complained, “Now they want to know every last detail, like how we comb our hair and our shoe size.”

Avoiding the Grey List

Monaco’s international profile, specifically its extensive banking and financial services, leaves it vulnerable to illicit financial flows. Moneyval, a Council of Europe body responsible for evaluating AML measures, identified several deficiencies and shortcomings in Monaco’s framework in its assessment report published in December 2022. The principality runs the risk of being added to the grey list of jurisdictions with inadequate AML systems.

Confronting Vulnerabilities

Monaco, long favored by criminals seeking to launder proceeds from tax fraud, embezzlement, and corruption, has responded with decisive action. The head of government, Pierre Dartout, announced the adoption of measures to meet the most stringent international standards and address Moneyval’s concerns. Monaco has started the 12-month observation period to demonstrate its commitment to international rules.

Final Decision by the FATF

The outcome of Monaco’s efforts will be determined by the Financial Action Task Force (FATF), which will make the final decision in 2024. Monaco’s reputation as an international financial hub, and its placement alongside countries like the United Arab Emirates, Gibraltar, and Bulgaria on the grey list, hangs in the balance. The eyes of the world will be watching closely.

FATF’s Role

• Intergovernmental organization
• Tasked with combating money laundering and financing terrorism

Recent Events Escalating Concerns

• Concealment of Russian assets in Monaco following Russia’s invasion of Ukraine

Mitigating Risks

Monaco’s authorities are addressing concerns regarding its risk analysis capabilities. The progress made in addressing weaknesses and the successful implementation of new measures will be crucial in strengthening Monaco’s financial sector and safeguarding its reputation.