Monaco Makes Strides in Combating Money Laundering, Says MONEYVAL Report

Monaco has made significant progress in its efforts to combat money laundering and terrorism financing, according to a new report by MONEYVAL, the Council of Europe’s anti-money laundering (AML) monitoring body. The findings come just months after the Financial Action Task Force (FATF) added Monaco to its grey list, subjecting the jurisdiction to heightened scrutiny of its financial systems.

The report highlights Monaco’s advancements since its 2022 evaluation, with notable improvements in compliance with 15 FATF recommendations. These include measures related to confiscation of illicit assets, sanctions against terrorism and proliferation, transparency in ownership structures, and enhanced supervision of financial institutions. Recommendations 6, 7, and 12 were upgraded to a “compliant” rating, while several others were reclassified as “largely compliant.”

MONEYVAL emphasized that Monaco now fully complies with seven FATF recommendations and is largely compliant with 32 others, leaving only minor deficiencies in its technical framework. Just one recommendation—focused on addressing risks associated with new technologies—remains “partially compliant,” and no recommendations are rated as “non-compliant.” MONEYVAL commended these advancements, stating, “These achievements meet expectations for jurisdictions to address compliance deficiencies within two years of their evaluation.”

Despite these improvements, the report focuses on legislative and institutional changes rather than the practical implementation of these reforms. Monaco is expected to provide further updates on its progress within the next three years.

The greylisting by FATF earlier this year underscored significant challenges for Monaco, a jurisdiction renowned for its €160 billion funds industry and tax-free financial environment. FATF had raised concerns about Monaco’s understanding of money laundering risks linked to foreign tax fraud, its limited efforts to recover criminal assets held abroad, and inadequate sanctions for breaches of AML regulations. Operational weaknesses were also identified, including staffing shortages within Monaco’s Financial Intelligence Unit (FIU) and delays in suspicious transaction reporting (STRs).

These challenges, alongside the FATF greylisting, have sparked concerns over reduced international investment, particularly as Monaco is a financial hub for the ultra-wealthy. MONEYVAL’s previous evaluation in 2022 had identified fundamental flaws in Monaco’s AML regime, particularly in areas such as investigations, prosecutions, and the transparency of beneficial ownership.

While the latest report acknowledges Monaco’s significant progress in addressing the gaps identified during its last evaluation, the jurisdiction continues to face scrutiny. Maintaining this momentum and ensuring effective implementation of its AML measures will be critical as Monaco works to strengthen its financial regulatory framework and solidify its position in the global financial system.

By fLEXI tEAM