Financial Crime World

Monaco’s Fifth Round Evaluation in MONEYVAL Report: Strengthening the Fight Against Financial Crime and Terrorism Financing

Monaco’s financial sector underwent a critical assessment in the MONEYVAL fifth-round evaluation report, published on January 23, 2023. Following an onsite visit in March 2022, the report calls for more effective measures to counteract money laundering (ML) and terrorism financing (TF) within the Principality.

Key Findings and Concerns

Monaco showed a modest level of effectiveness in evaluating ML/TF risks, international cooperation, and the implementation of Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) preventive measures in the private sector. Some crucial areas in need of improvement include:

  1. Transparency of Legal Persons
  2. Supervision
  3. ML investigations and prosecutions
  4. Confiscation of proceeds of crime

Areas of Concern and Recommendations

Understanding ML/TF Risks

Monaco has made some strides in identifying ML/TF risks. Yet, several sectors such as casinos, company services providers, trusts, virtual assets, and organized crime-related and external ML threats need more attention.

  1. Casinos: STRs from casinos are limited, given their significance in Monaco.
  2. Company services providers, trusts, and virtual assets: These sectors are yet to be adequately addressed.
  3. Organized crime: The Monegasque Financial Intelligence Unit (SICCFIN) must work closely with law enforcement and Judiciary to detect and investigate such cases.
  4. External ML threats: Monaco’s proximity to international borders increases the risk of exposure to external ML threats.

The Role of Monegasque Financial Intelligence Unit (SICCFIN)

The Monegasque Financial Intelligence Unit plays a vital role in producing high-quality analyses but faced significant resource constraints, limiting its ability to fully utilize these analyses by investigative authorities. Monaco should address this issue to improve investigations efficiency.

Private Sector Compliance

Designated non-financial businesses and professions (DNFBPs) have made some progress in implementing AML/CFT obligations. However, improvements are needed to:

  1. Risk understanding
  2. Compliance culture

ML investigations and prosecutions and Proceeds of Crime

Monaco has secured convictions related to ML using proceeds of crime originating abroad and standalone ML cases. However, more work is needed in addressing ML committed by third parties due to Monaco’s role as an international economic and financial center.

Recommendations

To tackle the identified concerns, Monaco must focus on:

  1. Improving overall framework for ML/TF prevention and combat.
  2. Enhancing cooperation between sectors.
  3. Addressing resource limitations in critical areas like the Monegasque Financial Intelligence Unit.