Financial Crime World

Monaco’s Trust Companies Face Scrutiny Over Bank Account Lack

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The Association Monégasque de Surveillance des Finances (AMSF) has recently published a report revealing that many trust companies in Monaco do not have a Monegasque bank account. This lack of a “double layer” of customer due diligence (CDD) carried out by both the trust company and a bank poses significant risks to financial institutions.

Trust Companies Face Weak Controls

The report highlights the inherent risks associated with the trust company sub-sector, citing a “weak” overall controls score. Many trust companies were brought into scope of the anti-money laundering (AML) and combating the financing of terrorism (CFT) regime only recently, which has resulted in a lack of compliance with new AML/CFT obligations.

Business Centers Face Medium-High Risks

In contrast, business centers in Monaco face medium-high inherent risks due to their acceptance of cash transactions and limited understanding of high-risk customers. The AMSF has identified several areas for improvement, including the need for more effective customer data collection and enhanced CDD procedures.

Ratings Across Sub-Sectors

The report provides a comprehensive overview of the inherent risks and controls across the trust company, business center, and trustee sub-sectors in Monaco. The ratings indicate that trustees face low inherent risks due to strong knowledge of customers and beneficial owners (BOs), while trust companies face medium-high inherent risks.

Follow-Up Actions

The AMSF has outlined several follow-up actions to address the findings of its report, including:

  • Thematic inspections
  • Guidance and outreach
  • Data collection and analysis
  • Review of individual risk profiles
  • Periodic updating of the SRA
  • Conducting a review of the business risk assessment (BRA) in light of the SRA’s findings

Practical Recommendations

Financial institutions are advised to:

  • Assess and mitigate any risks posed by forming a business relationship with trust companies or accepting cash transactions from customers
  • Monitor cash operations
  • Distinguish between different customer profiles
  • Reconsider documentation requirements for trustee clients

The AMSF’s report highlights the need for improved controls and enhanced due diligence procedures in Monaco’s trust company sector to prevent financial crimes and maintain the country’s reputation as a reputable financial hub.