Financial Crime World

Medium Risk Rating for Business Centres: SRA Concludes Assessment

A comprehensive assessment by the Monetary Authority of Monaco (AMSF) has concluded that business centres in the country are at medium risk for money laundering and terrorist financing.

Sector Risk Assessment

The Sector Risk Assessment (SRA) is a thorough evaluation of the inherent risks and controls of various sub-sectors within the financial sector. The SRA aims to identify areas where improvement is needed and provide guidance on how to strengthen anti-money laundering and counter-terrorism financing measures.

Business Centres at Higher Risk

According to the report, business centres were found to be at higher risk due to their role in providing addresses and PO boxes, which can facilitate illegal activities. Additionally, survey data provided by business centres highlighted weaknesses in customer due diligence, particularly with regards to:

  • Politically Exposed Persons (PEPs)
  • High Net Worth Individuals (HNWIs)

Priorities for Improvement

To address these risks, AMSF has identified several priorities for improvement:

  • Establish effective control frameworks, including:
    • Robust risk assessments
    • Adequate due diligence on clients
    • Regular reporting of suspicious transactions
  • Conduct full- scope inspections of TCSP companies with high residual risks, focusing on areas where inherent risks are considered particularly high or controls are weak
  • Conduct thematic inspections to assess the effectiveness of:
    • Customer risk assessment
    • Risk-based approach to customer due diligence
    • Links to higher-risk countries
    • Treatment of PEPs and enhanced due diligence

Guidance Papers

The Monetary Authority of Monaco has committed to publishing guidance papers to help businesses enhance their controls and build effective control frameworks. The first set of guidance papers will focus on:

  • Business risk assessment
  • Treatment of PEPs
  • STR filing
  • TFS (Terrorist Financing and Sanctions)

Conclusion

Overall, the SRA concludes that while there are areas for improvement, the majority of business centres in Monaco have a medium-level risk rating. By implementing the recommended measures, AMSF aims to ensure that the sector remains robust against money laundering and terrorist financing threats.