Financial Crime World

Monaco: Financial Transparency and Risk Analysis - FTA’s Report on Money Laundering and Financial Threat Assessment

Financial Transparency Advisors (FTA), a leading financial transparency and risk analysis firm, has published a report on Monaco’s Money Laundering and Financial Threat Assessment. The study revealed several shortcomings in Monaco’s assessment of financial crime risks, particularly in relation to income tax fraud, sectors like casinos and trusts, and the distinction between internal and external threats.

Key Findings

Monaco, known for its luxurious standard of living and attractive financial institutions, showed a considerable understanding of the money laundering risks it faces. However, the analysis fell short in addressing income tax fraud and related offenses as well as internal versus external threats adequately.

FTA proposes the following actions for Monaco:

  1. Analyze Income Tax Fraud and Other Offenses: a. Assess the extent of money laundering (ML) risks b. Acknowledge non-criminalization as a vulnerability c. Conduct a comprehensive analysis of national and sectoral vulnerabilities

  2. Refine the Assessment of Risks Associated with Sectors and Activities:

    • Casinos, casino service providers (CSPs), trusts, and virtual assets
    • Use available information for examination

Report Products

FTA’s report includes the following:

  • National Tax Risk Assessment
  • Sectoral Risk Assessment:
    • Casino
    • Trust & Company Service Providers
    • Legal Entities
    • Virtual Assets
  • 2023/24 Money Laundering Threat Assessment

Areas of Focus

The assessment covers the following areas:

  • Organized Crime
  • Internal vs. External threats

Data Sources

FTA utilized the following data sources for its analysis:

  • 2020 – 2023 (post-MER)
  • Datashare Platform (21 new case studies)
  • Financial Intelligence Unit (AMSF) (CRF):
    • 64 Intel packages disseminated to GPO & DSP
    • 24 Suspicious Transaction Reports (STRs) - DNFBPs

Methodology

FTA performed an in-depth analysis of each case study:

  • Identifying links to organized crime
  • Determining the origin of funds and legal/natural persons involved
  • Identifying the likely predicate offenses and nature of laundering
  • Examining the sectors involved

Findings: Organized Crime

Monaco is exposed to organized crime but with relatively few recorded instances were found. The primary threat arises from individuals rather than groups.

Case Studies

Example 1: April 2022

A foreign national, Subject 1, made frequent visits to the casino and exchanged large sums of cash. They also issued invoices to a company owned by their relatives, which is linked to high-profile organized crime investigations. The individual had a criminal history, including convictions for organized crime activities and illegal possession of weapons.

Example 2: 2022

Subject X, a previous money laundering suspect, rented an apartment in Monaco as a family home. They paid the rent in cash, evaded the eviction proceedings, and the actual tenant was a foreign national identified as a possible member of a high-profile organized crime group.

Internal vs. External Threats

External threats originate from both domestic and foreign sources. Threats also come from:

  • Foreign nationals residing in Monaco
  • Monaco-based bank accounts and businesses
  • Overseas companies dealing with Monaco-based entities

Approximately 75% of the threats originate from overseas.

Internal threats involve:

  • Monegasque nationals and trust companies
  • Self-laundering by Monaco-based criminals
  • Domestic natural and legal persons using Monaco bank accounts
  • Trust companies forming companies
  • Abuse of Monaco companies

Less than 7% of cases have identifiable links to external threats.

Confidentiality Notice:

This report should be used for exclusive purposes by the designated recipient. It should not be reproduced, distributed, or disclosed to any third parties without prior written consent from Financial Transparency Advisors GmbH.