Monaco’s Race Against Time: Boosting Financial Crime Risk Assessment before FATF Decision
Monaco, the glamorous principality known for its elegance and exclusivity, has become a hub of activity in the financial world. The Business Development Agency in this luxurious destination is witnessing an influx of company directors seeking to comply with Monaco’s new transparency rules.
The Surge in Compliance: A Challenging Process
The Register of Beneficial Owners has experienced a surge of applicants trying to list the true owners behind their companies. Monaco’s new transparency rules aim to reduce the principality’s vulnerability to being used as a money laundering haven. “The lines were snaking around last time,” recalled a frustrated director in December 2023. However, the exercise left some directors feeling exposed: “Now they want to know my hair combing routine and my shoe size,” sighed another director, waiting in line.
Monaco’s Reputation at Stake
Monaco’s authorities are leaving no stone unturned to prevent the principality from being added to the “grey list” of countries criticized for weak anti-money laundering measures. The prospect of being grouped with countries like the United Arab Emirates, Gibraltar, and Bulgaria poses a significant threat to Monaco’s reputation as a prestigious international financial center.
Moneyval’s Assessment Report
Moneyval, the Council of Europe’s body tasked with assessing anti-money laundering and counter-terrorist financing measures’ effectiveness, issued a December 2022 assessment report recognizing Monaco’s progress but also highlighting several deficiencies, weaknesses, and shortcomings. Monaco was criticized for the absence of a thorough financial crime risk assessment.
Monaco’s Vulnerability
Monaco, due to its “international profile, particularly through the banking and financial services it offers,” is considered a higher risk for financial crimes. Criminals often see the principality as an attractive place for laundering proceeds from tax fraud, embezzlement, and corruption. A recent case involved hiding Russian assets in Monaco following Russia’s invasion of Ukraine.
The Determination to Meet International Standards
Monaco’s Response
Monaco’s authorities responded immediately by announcing that “Monaco is determined to pursue the implementation of Moneyval’s recommendations to meet the highest international standards.” Monaco now has a twelve-month observation period during which it must demonstrate its adherence to international rules and avoid being placed on the grey list by the Financial Action Task Force (FATF) in 2024.
The Global Impact of the FATF Decision
The FATF sets the global anti-money laundering and combating the financing of terrorism standards. Monaco’s determination to meet these standards and maintain its reputation of exclusivity and elegance is a significant undertaking. In the meantime, Monaco continues its diligent efforts to clean up its act and uphold its commitment to global financial transparency.
Bullet Points Summary
- Monaco experiencing a surge of directors seeking to comply with new transparency rules.
- Moneyval’s pointed out several deficiencies, weaknesses, and shortcomings, particularly the absence of a thorough financial crime risk assessment.
- Monaco’s vulnerability to money laundering due to its international profile and financial services.
- Monaco determined to meet Moneyval’s recommendations and international standards to avoid grey list placement.
- Monaco’s adherence to international rules will be under observation for the next year by FATF.
- Monaco’s reputation as a prestigious international financial center is at stake.
- FATF sets the global anti-money laundering and combating the financing of terrorism standards.