Financial Crime World

Monaco’s AML System Under Scrutiny: Council of Europe Report Highlights Key Vulnerabilities

Introduction

The Council of Europe has published a report highlighting significant vulnerabilities in Monaco’s measures against money laundering, putting the country at risk of being placed under intense scrutiny by the international Financial Action Task Force (FATF) watchdog.

Key Findings

  • Monaco faces substantial money laundering risks due to its “internationally oriented financial activities” and is considered a prime target for illicit cross-border financial flows.
  • In most cases, frauds are committed abroad while the proceeds of crime are laundered in Monaco.
  • The report highlights the need for improved risk analyses, international cooperation, and the dissuasiveness of sanctions to combat fraud and corruption risks.

Risks and Vulnerabilities

  • Monaco is considered a prime target for illicit cross-border financial flows due to its internationally oriented financial activities.
  • Fraud and corruption risks are high, with many cases failing to be identified by authorities in the first place.
  • The speed of investigations is also questioned, with some lasting up to 10 years.

Recommendations

  • Improve risk analyses and international cooperation to combat fraud and corruption risks.
  • Introduce guidelines for wealth management and private banking firms to ensure greater compliance with Monaco’s supervisory framework.
  • Strengthen supervision of financial institutions and non-financial businesses such as real estate agents, property dealers, and private banking firms.

Consequences

  • If structural reforms are not implemented during the one-year observation phase, Monaco risks being named and shamed in a public “grey list”.
  • Countries that have been grey-listed include Albania, Barbados, Gibraltar, Morocco, and Panama, among others.
  • The country’s authorities will work actively with FATF in the coming year to address structural deficiencies.

Government Response

  • The Monegasque government has responded, stating that it adheres fully to the policy recommendations of the report and is committed to implementing them quickly to align with international standards.

Conclusion

The Council of Europe’s report highlights significant vulnerabilities in Monaco’s measures against money laundering, putting the country at risk of being placed under intense scrutiny by the international FATF watchdog. The report calls for improved risk analyses, international cooperation, and stronger supervision of financial institutions and non-financial businesses to combat fraud and corruption risks. If reforms are not implemented, Monaco risks being named and shamed in a public “grey list”.