Monaco Added to FATF Greylist, Turkey and Jamaica Removed

The tiny European principality of Monaco, a haven for the world’s super-rich, was on Friday added to the FATF greylist, alongside Venezuela. While Monaco joins the EU country of Bulgaria on the watchlist, the countries of Turkey and Jamaica were removed.

Monaco is the highest-profile European jurisdiction added to the FATF greylist in years. Prince Albert II is the head of state of the country, which is effectively the city of Monte Carlo and is located on the Mediterranean between France and Italy.

Announcing the move today, the Paris-based Financial Action Task Force (FATF) said: "In June 2024, Monaco made a high-level political commitment to work with the FATF and MONEYVAL to strengthen the effectiveness of its AML/CFT regime."

FATF noted that Monaco had made "significant progress" on several key anti-money laundering areas since December 2022. These included establishing a new combined financial intelligence unit (FIU) and AML/CFT supervisor and implementing "targeted financial sanctions and risk-based supervision of non-profit organisations."

However, FATF stated there are multiple aspects of its AML regime that need to be improved. These include:

- Strengthening the understanding of risk in relation to money laundering and income tax fraud committed abroad

- Demonstrating a sustained increase in outbound requests to identify and seek the seizure of criminal assets abroad

- Enhancing the application of sanctions for AML/CFT breaches and breaches of basic and beneficial ownership requirements

- Completing its resourcing program for its FIU and strengthening the quality and timeliness of STR reporting

- Increasing the seizure of property suspected to derive from criminal activities.

The tiny European principality is home to a €160 billion funds industry and is a hub for the super-wealthy, many of whom have made the jurisdiction a home as it has no income tax, capital gains tax, or inheritance tax.

Jurisdictions on the FATF grey list are placed under increased monitoring, which tends to lead to reduced international investment. Therefore, there are likely to be serious concerns in Monaco about the impact of the move on the principality.

Regarding Venezuela, FATF made similar comments to Monaco, saying the country had improved several areas of money laundering oversight since 2022. However, it added there are several aspects it must continue to improve. These include:

- Strengthening its understanding of ML/TF risks, including in relation to TF and legal persons and arrangements

- Ensuring the full range of financial institutions are subject to AML/CFT measures and risk-based supervision

- Ensuring adequate, accurate, and up-to-date beneficial ownership information is accessible in a timely manner

- Enhancing the resources of the FIU and improving competent authorities’ use of financial intelligence.

Meanwhile, Turkey’s finance minister announced today, "we succeeded," as the country was removed from the grey list. Finance Minister Mehmet Simsek, who is attending the FATF meeting in Singapore, made the comment followed by an emoji of the Turkish flag on the social media platform X.

Turkey was downgraded to the FATF grey list in 2021 due to concerns about the effectiveness of its measures to combat money laundering and terrorist financing. A decision to remove Turkey from the list, if confirmed, is seen as boosting Turkey’s international standing and prospects of attracting investment.

There are some two dozen nations on the grey list considered risky by the FATF, a body that groups countries from the United States to China to tackle financial crime. In February, it removed the United Arab Emirates from the list.

The FATF said in February that Turkey "has substantially completed its action plan" and warranted an on-site assessment. It held talks in Turkey last month to evaluate the country’s actions against money laundering and illegal financing.

By fLEXI tEAM