Financial Crime World

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MONACO UNDER SCRUTINY: COUNCIL OF EUROPE REPORT HIGHLIGHTS VULNERABILITIES IN ANTI-MONEY LAUNDERING MEASURES

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A recent report by the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) has shed light on significant vulnerabilities in Monaco’s measures against money laundering. The report, published on Monday, warns that Monaco risks being placed under intense scrutiny by the international Financial Action Task Force (FATF) watchdog.

MONACO A “PRIME TARGET” FOR ILLICIT CROSS-BORDER FINANCIAL FLOWS

The report emphasizes that Monaco’s internationally oriented financial activities make it a prime target for illicit cross-border financial flows. In most cases, frauds are committed abroad, while the proceeds of the crime are laundered in Monaco.

Key Risks and Vulnerabilities

  • Risk analyses: Monaco falls short of international standards
  • International cooperation: Monaco’s effectiveness is uneven
  • Dissuasiveness of sanctions: Monaco’s system is inadequate

UNEVEN SUPERVISION OF FINANCIAL INSTITUTIONS AND NON-FINANCIAL BUSINESSES

The report claims that the effectiveness of Monaco’s Anti-Money Laundering (AML) system is uneven and not all risks have been effectively accounted for. This is particularly true regarding laundering the proceeds of income tax fraud committed abroad.

Lack of Regulation in Key Areas

  • Financial institutions: Supervision faces little to no formal regulation
  • Non-financial businesses:
    • Real estate agents
    • Property dealers
    • Private banking These businesses can transit heavy loads of money with little oversight

A key concern raised by the report is that many cases fail to be identified by authorities in the first place, and investigations are often slow. The report notes that handling complex financial fraud cases remains inadequate, with only six convictions handed down between 2017 and 2021.

Inadequate Response Times and Legislation

  • Investigations: Slow response times hinder effective prosecution
  • Sanctions: Imposed only once since 2017
  • Domestic legislation: Needs to adapt to impose time limits on appeals

MONACO FACES RISK OF “GREY-LISTING”

The Monegasque government told EURACTIV that it adhered fully to the policy recommendations of the report and was determined to implement them quickly. However, if Monaco fails to address structural deficiencies, it runs the risk of being “grey-listed” as early as mid-2024.

Countries on the Grey List

  • Albania
  • Barbados
  • Gibraltar
  • Morocco
  • Panama
  • Others

Monaco was previously listed as an uncooperative tax haven until 2009.