Financial Crime World

Monaco Slips onto FATF’s Grey List Despite Progress on Anti-Money Laundering Efforts

The Financial Action Task Force (FATF) has placed Monaco under increased monitoring, citing significant progress made by the principality in implementing anti-money laundering and combating the financing of terrorism (AML/CFT) measures. However, the grey listing comes despite Monaco’s efforts to strengthen its AML/CFT regime.

Monaco’s Progress

According to a FATF press release, Monaco has made substantial progress on several actions recommended by MONEYVAL last year, including:

  • Establishment of a new combined financial intelligence unit and AML/CFT supervisor
  • Implementation of targeted financial sanctions
  • Risk-based supervision of non-profit organizations

Challenges Remain

Despite this progress, Monaco still faces significant challenges in implementing its action plan. The FATF has set a timetable for Monaco to meet specific milestones over the next 18 months, with two intermediate deadlines in May 2025 and September 2025. By January 2026, Monaco must have fully implemented all of the recommended actions.

Government Commitment

Monaco’s government has reaffirmed its commitment to implementing the FATF recommendations, despite the grey listing. The principality had made a high-level political commitment to work with the FATF and MONEYVAL in June 2024 to strengthen its AML/CFT regime.

Key Areas for Improvement

To move off the grey list, Monaco must continue to work on several key areas, including:

  • Improving its understanding of risk related to money laundering and income tax fraud committed abroad
  • Increasing outbound requests for asset seizures
  • Enhancing sanctions for AML/CFT breaches

Additionally, Monaco must:

  • Complete its resourcing program for its financial intelligence unit
  • Improve the quality and timeliness of suspicious transaction reports
  • Increase the seizure of property suspected to derive from criminal activities

Implications

Monaco’s grey listing is a blow to the principality’s reputation as a financial hub, but it may also provide an opportunity for the government to further strengthen its AML/CFT measures and regain compliance with international standards.