Financial Crime World

MONACO EMBEZZLEMENT CASES UNDER SCRUTINY AS COUNCIL OF EUROPE REPORT REVEALS KEY VULNERABILITIES

A recent report published by the Council of Europe has highlighted 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 a high level of money laundering risks due to its internationally oriented financial activities and lack of effective supervision.
  • The country is a “prime target” for illicit cross-border financial flows, with most fraud cases committed abroad and the proceeds laundered in Monaco.
  • Income tax evasion is not criminalized in Monaco, and no serious risk analysis has been undertaken regarding laundering the proceeds of income tax fraud committed abroad.

AML System Inefficiencies

  • The effectiveness of Monaco’s Anti-Money Laundering (AML) system is “uneven”, with some risks not being effectively accounted for.
  • Supervisory activities of financial institutions and non-financial businesses, such as real estate agents, property dealers, and private banking firms, are deemed high-risk but have little to no formal regulation.

Investigations and Prosecutions

  • Investigations and prosecutions related to money laundering cases in Monaco are inadequate, with many cases failing to be identified by authorities in the first place.
  • Investigations often take up to 10 years to complete, resulting in only six convictions between 2017 and 2021.

International Cooperation Obstacles

  • Individuals involved in cross-border investigations can lodge appeals in Monaco, slowing down the process and hindering international investigations.

Government Response

  • The Monegasque government has promised to implement the recommended policy changes quickly to align with international standards.
  • Failure to address these structural deficiencies could result in being placed on a “grey list” as early as mid-2024, joining countries such as Albania, Barbados, and Panama.

International Context

  • Monaco has faced criticism for its alleged role in protecting the fortunes of Russian oligarchs despite international sanctions.
  • The country is due to enter a one-year observation period after the report goes to FATF plenary on February 20.