Monaco’s Fifth Evaluation Round by MONEYVAL: Major Improvements Needed in AML/CFT Measures

MONEYVAL’s Report on Monaco’s AML/CFT Performance (January 2023)

MONEYVAL, the Council of Europe’s anti-money laundering (AML) and countering-terrorism financing (CTF) body, published a report on Monaco’s fifth evaluation round on 23 January 2023. Monaco’s approach to preventing and combating money laundering (ML) and terrorism financing (TF) was assessed during an onsite visit in March 2022.

Key Findings and Major Improvements

Effectiveness in Addressing Key Issues

Monaco showed moderate effectiveness in several key areas, including ML/TF risk understanding, international cooperation, AML/CFT measures in the private sector, use of financial intelligence, and implementation of United Nations targeted financial sanctions (TFS). However, major improvements were identified in transparency of legal persons, supervision, ML investigations and prosecutions, and confiscation of proceeds of crime.

Sectors in Need of Improvement

Several sectors still need adequate attention, namely casinos, company services providers, trusts, virtual assets, and organized crime and external ML threats.

Monegasque Financial Intelligence Unit (SICCFIN)

Despite a significant lack of human and technical resources, SICCFIN’s analyses demonstrated high quality. Still, their effectiveness could be improved as they are not utilized properly by investigative authorities.

Recommendations and Challenges

Enhancing Identification and Prioritization of ML Cases

Monaco must increase its efforts in identifying and prioritizing ML cases, with a focus on seizure, confiscation, and recovery of proceeds and proceeds of predicate offenses.

Improving the Supervisory System

Significant improvements are necessary in addressing deficiencies related to beneficial ownership. A lack of risk understanding hinders the effective application of tailored supervision for obliged entities.

Private Sector Compliance

AML/CFT obligations are implemented by the private sector, but their effectiveness requires further enhancement. While the banking sector submits a satisfactory number of Suspicious Transaction Reports (STRs), other sectors like casinos and jewellers report limited numbers, despite their substantial economic contribution.

Criminal Convictions and Sanctions

Monaco has secured ML convictions involving proceeds of foreign crime and standalone ML convictions. However, third-party ML remains a significant deficiency, which contradicts Monaco’s standing as an international economic and financial centre. The sanctions imposed are proportional but not effective or dissuasive. The number of confiscation measures remains low, with limited impact on corresponding values and third parties’ property.

Legal Framework for TFS Implementation

Monaco’s legal framework for implementing TFS at international, European, and national levels is adequate, but implementation faced delays due to late transposition of designations.

International Cooperation

Further improvements are required in international cooperation. Although Monaco seeks cooperation from counterparts, mutual legal assistance is hindered by systemic and unusual legislative obstacles. The restrictive interpretation by the courts of the dual criminality principle results in only one out of two extradition requests being granted.