Financial Crime World

Effective Risk Management Measures Implemented by Monaco’s Financial Institutions

February 2023 - Principality of Monaco

The Financial Action Task Force (FATF) has released its latest Mutual Evaluation Report, which highlights the significant measures implemented by Monaco to ensure effective risk management in its financial institutions. The report concludes that Monaco’s efforts to combat money laundering and terrorist financing are largely compliant or partially compliant in most areas.

Strengths Identified

The report highlights several strengths, including:

  • Robust National Cooperation: Monaco’s national cooperation and coordination mechanisms are robust, ensuring a coordinated approach to combating money laundering and terrorist financing.
  • Effective Confiscation and Provisional Measures: The country has effective confiscation and provisional measures in place against illegal activities, demonstrating its commitment to disrupting criminal networks.
  • Strict Financial Institution Secrecy Laws: Monaco’s laws governing financial institution secrecy are strict, ensuring that financial institutions maintain high standards of transparency.

Areas for Improvement

However, the report also identifies some areas for improvement, including:

  • Strengthening Customer Due Diligence Requirements: Monaco is encouraged to strengthen its customer due diligence requirements to ensure that financial institutions have robust processes in place to identify and mitigate risks.
  • Enhancing Internal Controls: The country should enhance internal controls at financial institutions to prevent money laundering and terrorist financing.
  • Reliance on Third Parties: Monaco should reduce its reliance on third parties and improve reporting of suspicious transactions.

Assessment of Compliance

The FATF evaluation assesses Monaco’s compliance with 40 recommendations aimed at preventing money laundering and terrorist financing. While the country has made significant progress in implementing these measures since the previous evaluation in 2019, it still faces some challenges.

Conclusion

Monaco’s financial sector plays a key role in the global economy, and its commitment to effective risk management is essential to maintaining its reputation as a stable and secure financial hub. The government has pledged to continue working to strengthen its anti-money laundering and combating the financing of terrorism (AML/CFT) framework, addressing any remaining deficiencies identified by the FATF.

The report provides a roadmap for further improvement, which will help Monaco maintain its position as a leading financial center and ensure that it continues to meet international standards for AML/CFT compliance.