Financial Crime World

Monaco’s Economy under Scrutiny: MONEYVAL Report on Monaco’s Effectiveness in Combating Money Laundering and Terrorism Financing

On 23 January 2023, the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering and Counter-Terrorist Financing Measures (MONEYVAL) published its fifth-round evaluation report on Monaco. The assessment, conducted between September 2022 and March 2023, focused on Monaco’s ability to prevent and combat money laundering (ML) and terrorism financing (TF).

Moderate Effectiveness in Several Areas

The report found that Monaco Exhibits Moderate Effectiveness in the Following Areas:

  • Risk understanding
  • International cooperation
  • Application of Anti-Money Laundering/Counter-Terrorist Financing (AML/CFT) measures in the private sector
  • Use of financial intelligence
  • Implementation of United Nations targeted financial sanctions (TFS) on TF and proliferation financing (PF)

Major Improvements Required

Major improvements are needed in the following areas:

Monaco lacks an adequate system for identifying beneficial owners and registering companies. This makes it challenging to effectively monitor and supervise suspicious activities.

Supervision

Deficiencies in Monaco’s supervisory system hinder its capacity to address ML risks in various sectors.

ML Investigations

Monaco needs to enhance its efforts to identify and prioritize ML cases, particularly in seizing, confiscating, and recovering proceeds of crime.

Effectiveness of sanctions

The imposed sanctions do not appear to be dissuasive, and the number of confiscation measures ordered remains low.

Sectors requiring attention

Certain industry sectors, such as casinos, company services providers, trusts, virtual assets, and those related to organised crime and external ML threats, still need to be adequately addressed. Monaco has undertaken efforts to identify ML/TF risks, but the private sector, in particular, needs to strengthen its compliance culture.

Commendable Work of the Monegasque Financial Intelligence Unit (SICCFIN)

The report acknowledged the commendable work of the Monegasque Financial Intelligence Unit (SICCFIN) in generating high-quality analyses. However, it noted a significant lack of human and technical resources, preventing full utilization of these analyses by investigative authorities.

TFS Implementation

Monaco’s legal framework is suitable for the implementation of TFS at international, European, and national levels. However, delays in the transposition of designations have impacted the effectiveness of the mechanisms, and existing awareness-raising and supervision measures are no longer considered proportionate and targeted.

Prosecutions and Convictions

There have been no known convictions or prosecutions for TF in Monaco, which the report suggests may not be consistent with its risk profile. Monaco cooperates with international partners but faces challenges related to legislative and systemic obstacles that limit its ability to provide mutual legal assistance efficiently.

Future Steps

Monaco must address these issues thoroughly to strengthen its position as a reputable international economic and financial centre while ensuring full compliance with AML/CFT obligations. The report emphasized the need for Monaco to enhance its efforts to address the identified ML risks and improve the transparency and supervision of various sectors. Furthermore, Monaco should focus on increasing the effectiveness of its sanctions and investigations and cooperating more closely with international partners to improve the overall anti-money laundering and counter-terrorist financing framework.