Monaco’s Economic Sectors Face Challenges in Combating Money Laundering and Terrorism Financing

Monaco, renowned for its safety and reputation as an international financial hub, is facing significant challenges in combating money laundering (ML) and terrorist financing (TF). A recent report by the Financial Action Task Force (FATF) highlights the country’s uneven effectiveness in implementing anti-money laundering and combating the financing of terrorism (AML/CFT) measures.

Challenges in Implementing Anti-Money Laundering Measures

• Monaco’s ML investigations are plagued by significant delays, leading to a low number of prosecutions and convictions.
• The authorities lack written policies and procedures for prioritizing investigations based on risks, making it difficult to effectively combat complex cases involving legal persons.

Limitations in Asset Recovery Efforts

• There is no strategy or official policy in place for asset recovery efforts.
• Confiscation orders have been rare, and none have covered property of equivalent value or property held by third parties.
• The authorities lack sufficient resources to manage seized assets and implement provisional measures.

Efforts to Improve the AML/CFT Framework

• Monaco has made efforts to improve its AML/CFT framework, including the establishment of a presumption mechanism in 2018.
• However, this mechanism has been used very limitedly, with only one conviction handed down since its introduction.

Challenges in Reporting Suspicious Transactions

• The country’s financial sector faces challenges in reporting suspicious transactions, with significant delays and inconsistencies reported by regulated entities.
• The authorities have not taken commensurate measures to address these issues, which hinders their ability to detect and prevent ML and TF.

Cooperation with Other Countries

• Monaco has been working to improve its cooperation with other countries, including France, to combat TF.
• However, the country’s resources to detect cases are limited in some respects, and the application of provisional measures is still very limited due to inherent shortcomings in the legal system.

Recommendations for Improvement

The FATF report calls on Monaco to strengthen its AML/CFT framework by:

• Improving its risk-based approach
• Enhancing cooperation with other countries
• Increasing resources for detecting and preventing ML and TF

By addressing these challenges, Monaco can better protect its financial sector and reputation as a safe and reputable hub for international finance.