In a report published today, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) encourages Monaco to further strengthen measures to combat money laundering (ML) and financing of terrorism (FT), in particular when it comes to investigating and prosecuting money laundering, confiscating and recovering proceeds of crime as well as strengthening its supervisory system.
The report provides a comprehensive assessment of the country’s level of compliance with the Financial Action Task Force (FATF) Recommendations as at the date of the onsite visit concluded in March 2022.
MONEYVAL acknowledges that the country has demonstrated a moderate level of effectiveness in relation to ML/TF risk understanding, international cooperation, the application of AML/CFT preventive measures by the private sector, the use of financial intelligence and the implementation of the United Nations targeted financial sanctions (TFS) on TF and proliferation financing (PF). The report finds that major improvements are also required regarding the transparency of legal persons, as well as TF investigations and prosecutions.
The report finds that fundamental improvements are needed to enhance effectiveness on supervision, ML investigations and prosecutions and confiscation of proceeds of crime.
MONEYVAL acknowledges that Monaco has undertaken commendable efforts to identify ML/TF risks. While the achieved results provide an initial risk understanding in some sectors, further analysis is needed regarding others (casinos, company services providers, trusts and virtual assets). Furthermore, the threat environment should be further analysed as regards organised crime and external money laundering threats.
The Monegasque Financial Intelligence Unit (SICCFIN) is a key source of financial intelligence. Despite a significant lack of human and technical resources, SICCFIN has proven its capacity to produce high-quality analysis, which however is not fully used by the investigative authorities.
MONEYVAL notes that ML investigations and prosecutions do not appear to be consistent with Monaco’s risk profile, with particular shortcomings relating to complex cases. The report expresses concerns regarding the very low number of convictions achieved, and the even lower number of confiscation measures ordered, none of which covers property of equivalent value or property held by third parties. Monaco needs to enhance its efforts to identify and prioritize ML cases, seize, confiscate and recover the proceeds of ML and predicate offences.
Monaco needs to fundamentally improve its supervisory system, MONEYVAL says. Deficiencies are noted in relation to beneficial ownership (BO) fit and proper checks, while the shortcomings in the risk understanding undermine authorities’ capacity to apply tailored supervision for a number of obliged entities. Sanctions for failure to comply with the AML/CFT obligations are limited, not proportionate, not dissuasive, and imposed with delays.
Turning to the private sector, MONEYVAL notes that the AML/CFT obligations are implemented to some extent. The number of suspicious transaction reports (STRs) originating from the banking sector can be considered satisfactory, although the large volume of defensive reporting and excessively long transmission times raise questions about the quality of information provided. The designated non-financial business and professions (DNFBPs) have a poorer AML/CFT risk understanding and compliance culture. The number of STRs filed by casinos and jewellers is still limited even though the two sectors play an important role in the Principality.
Monaco is commended for reforming, the framework enabling the implementation of TF and PF-related TFS under the United Nations Security Council Resolutions (UNSCRs). Since May 2021, the existing delays under the previous system were reduced, although technical deficiencies were identified, mainly regarding the risk of freezing measures being lifted. While Monaco carried out an initial risk assessment of the non-profit sector, due to its recent adoption, it was not used to construct a risk-based approach. The existing awareness-raising and supervision measures could not be regarded as proportionate and targeted.
MONEYVAL notes that there have been no prosecutions or convictions for TF in Monaco. Given the gaps in the TF risk analysis, it could not be concluded that this is fully in line with the country’s risk profile.
MONEYVAL acknowledges the good understanding of ML/TF risk associated with the activities of various types of legal persons, by the Monegasque authorities, but criticises major shortcomings in obtaining beneficial ownership information. The mitigating measures applied are insufficient when it comes to a high-risk category of legal persons and in relation to the non-for profit organisations. Most of the applicable sanctions are not dissuasive and are rarely imposed.
Major improvements are needed do enhance the Principality’s effectiveness in international cooperation. Monaco generally seeks the co-operation of its counterparts, although not entirely in line with the risk and context of the jurisdiction. The prosecution authorities execute requests satisfactorily, but systemic and unusual legislative obstacles, hinder the provision of mutual legal assisstance by Monaco. As far as extradition is concerned, the restrictive interpretation by the courts of the dual criminality principle results in one out of two requests being refused.
Based on the results of its evaluation, MONEYVAL decided to apply its enhanced follow-up procedure and invited Monaco to report back in December 2024.