In a 325-page report published in January, the Council of Europe's anti-money laundering body, MONEYVAL, placed Monaco under enhanced scrutiny and called on the Principality to strengthen its measures to combat money laundering and terrorist financing.
The report covers an assessment over several months, ending in March 2022, and based on today’s highest standards finds that risk analysis, international cooperation and the deterrent nature of sanctions are not fully adequate to address the risks of fraud and corruption.
As part of this enhanced monitoring, Monaco has one year to implement the recommended actions to remedy the perceived weaknesses, or risk being placed on the FATF's grey list - which is something that the Monegasque wished to avoid at all costs. As a reminder, Monaco was removed from this grey list in 2009.
Pending the next FATF plenary session which will take place this month, this follow-up will probably lead to even stricter controls by the authorities in the fight against money laundering.
The Monaco Government has already expressed its full support for the recommendations in a press release. It declares its determination to implement them and to comply rapidly. New laws have already been passed to change certain points in the legislation which were highlighted by Moneyval, and SICCFIN’s new IT platform for collecting information from obliged entities (Strix) will allow a more precise analysis of the activities of these businesses, and a better assessment of their risk profiles.
The report’s main findings are detailed below:
Monitoring system:
Although the efforts undertaken by Monaco are considered commendable, a more in-depth analysis of the risks faced by the Principality is necessary.
This is particularly the case for money laundering: the report is alarmed by the very low number of cases (investigations and prosecutions) in Monaco which is not consistent with the Principality's risk profile. Financial and non-financial institutions have been subject to little or no formal sanctions, even though the value of money transiting through them is substantial.
The report notes that in most cases frauds are committed abroad, whilst the proceeds of crime may be laundered in Monaco, it also stresses that Monaco faces significant money laundering risks, mainly because of the "internationally oriented financial activities" on offer - and the Principality is a "prime target" for illicit cross-border financial flows.
The supervisory system also needs to be improved to address identified deficiencies in beneficial ownership checks.
Alerts and reports:
While the banking sector does make Suspicious Activity Reports , the number is still too limited for Designated Non-Financial Businesses and Professions (DNFBPs), which highlights a perceived lack of understanding of the risks. This is particularly the case for casinos and jewellers, which play an important role in the Principality.
There are also a large number of defensive declarations and long transmission times raising questions about the quality of the information received.
SICFIN's assessment :
Despite a lack of human and technical resources, the Monegasque Financial Intelligence Service (SICCFIN) is able to produce quality analyses, which are however not fully exploited by the investigating authorities.
Insufficient sanctions and investigations
Sanctions are considered proportionate but not effective or dissuasive, and imposed with a delay which demonstrates a low level of effectiveness.
A major problem raised by this report is the management of investigations: a difficulty in identifying potential cases of money-laundering or terrorist financing and long investigations which can last up to 10 years due to limited investigative powers, insufficient staffing or the filing of appeals without time limits.
As income tax evasion is not criminalised in Monaco, no serious risk analysis has been undertaken to prevent the laundering of the proceeds of tax fraud committed abroad.
It should be noted, however, that the Principality is commended for its reform of the targeted sanctions framework related to terrorist financing and proliferation financing in May 2021, reducing the existing time limits.
Although the efforts undertaken by Monaco are considered commendable, a more in-depth analysis of the risks faced by the Principality is necessary.
This is particularly the case for money laundering: the report is alarmed by the very low number of cases (investigations and prosecutions) in Monaco which is not consistent with the Principality's risk profile. Financial and non-financial institutions have been subject to little or no formal sanctions, even though the value of money transiting through them is substantial.
The report notes that in most cases frauds are committed abroad, whilst the proceeds of crime may be laundered in Monaco, it also stresses that Monaco faces significant money laundering risks, mainly because of the "internationally oriented financial activities" on offer - and the Principality is a "prime target" for illicit cross-border financial flows.
The supervisory system also needs to be improved to address identified deficiencies in beneficial ownership checks.
Alerts and reports:
While the banking sector does make Suspicious Activity Reports , the number is still too limited for Designated Non-Financial Businesses and Professions (DNFBPs), which highlights a perceived lack of understanding of the risks. This is particularly the case for casinos and jewellers, which play an important role in the Principality.
There are also a large number of defensive declarations and long transmission times raising questions about the quality of the information received.
SICFIN's assessment :
Despite a lack of human and technical resources, the Monegasque Financial Intelligence Service (SICCFIN) is able to produce quality analyses, which are however not fully exploited by the investigating authorities.
Insufficient sanctions and investigations
Sanctions are considered proportionate but not effective or dissuasive, and imposed with a delay which demonstrates a low level of effectiveness.
A major problem raised by this report is the management of investigations: a difficulty in identifying potential cases of money-laundering or terrorist financing and long investigations which can last up to 10 years due to limited investigative powers, insufficient staffing or the filing of appeals without time limits.
As income tax evasion is not criminalised in Monaco, no serious risk analysis has been undertaken to prevent the laundering of the proceeds of tax fraud committed abroad.
It should be noted, however, that the Principality is commended for its reform of the targeted sanctions framework related to terrorist financing and proliferation financing in May 2021, reducing the existing time limits.
For more information, please contact office@rosemont-mc.com