Monaco should step up its efforts to investigate and prosecute money laundering, to confiscate and recover proceeds of crime as well as to strengthen its supervisory system

MONEYVAL has published the 5th round Mutual Evaluation Report (MER) on Monaco summarising the anti-money laundering counter financing of terrorism (AML/CFT) measures in place in Monaco as adopted by the MONEYVAL Committee at its 64th Plenary Session (5-9 December 2022).
CONSOLIDATED ASSESSMENT RATINGS
The updated Consolidated assessment ratings provide an up-to-date overview of all assessed countries concerning the effectiveness and technical compliance with the FATF Recommendations, using the FATF Methodology together with the FATF 4th Round Procedures. These ratings should be read in conjunction with the detailed Mutual Evaluations. All these documents are available on the FATF website. The FATF 40 Recommendations can have one of the following five settings:
C (Compliant)
LC (Largely compliant – There are only minor shortcomings)
PC (Partially compliant – There are moderate shortcomings)
NC (Non-compliant – There are major shortcomings)
NA (Not applicable – A requirement does not apply, due to the structural, legal or institutional features of the country)
Notable current characteristics and changes compared to previous reports on both effectiveness of Anti-Money Laundering/Combating Financial Terrorism (AML/CFT) systems as well as technical compliance with the FATF Recommendations are the following:
Monaco
R.14 (Money or value transfer services) rated at C
R.20 (Reporting of suspicious transactions) rated at C
R.21 (Tipping-off and confidentiality) rated at C
R.30 (Responsibilities of law enforcement and investigative authorities) rated at C
NOTE: All other ratings are either only rated at PC or LC. Please directly consult the latest version of the corresponding Consolidated assessment ratings table available as PDF or XLSX in conjunction with our own analysis below for more granular details.
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MONACO’S 5TH ROUND MUTUAL EVALUATION REPORT DECEMBER 2022
This report summarises the anti-money laundering and counter-terrorist financing (AML/CFT) measures in place in the Principality of Monaco as at the date of the on-site visit from 21 February to 4 March 2022.
Some ML risks have not been adequately explored. The number of ML investigations is still modest, primarily due to an inadequate number of parallel financial investigations. Investigations and prosecutions are partially in line with most aspects of Monaco’s risk profile, but gaps remain with regard to complex cases. To a certain extent, Monaco has demonstrated its ability to secure convictions for ML involving proceeds of crime generated abroad and stand-alone ML convictions, but this does not cover ML acts committed by third parties, which is a significant deficiency given Monaco’s status as an international center. The sanctions that have been put in place are proportionate but not effective or dissuasive, and they have only been imposed once.
Monaco has made efforts over the last few years to improve effectiveness in relation to asset recovery which have led to an increase in the implementation of provisional measures. However, the number of confiscation measures ordered is still very low and they do not concern property of corresponding value or property held by a third party. The confiscations achieved are not in line with Monaco’s ML risk profile.
There have been no convictions or prosecutions for TF in Monaco, which appears to be consistent with the country’s risk profile to a certain extent. The country’s authorities have undertaken TF training but lack specific procedures in this area and have been unable to demonstrate their full capacity to identify potential cases of TF. Co-operation between competent authorities appears to be adequate; however, the lack of information-sharing with the French customs authorities is proving to be a major deficiency in practice.
Overall, Monaco’s legal framework is appropriate for the implementation of TF/PF- related TFS at the international, European and national levels. The new system is beginning to demonstrate its effectiveness.
FIs have a knowledge of the main ML risks in Monaco, which are mentioned in NRA 2, though few were able to explain more specifically those related to the characteristics of their client portfolios or activity profile. All FIs implement identification and identity verification measures when forming relationships and perform ongoing due diligence on the business relationship for its entire duration. The existence of regulatory deficiencies in relation to beneficial owners and PEPs creates weaknesses which affect all financial and non-financial sectors. The implementation of measures to freeze assets and economic resources is satisfactory on the whole, but varies from sector to sector.
The authorities’ understanding of ML/TF risks associated with legal persons and legal arrangements is fairly satisfactory as far as activities pursued by different forms of companies are concerned, but is still limited in relation to the way in which legal persons are or may be misused for ML/TF.
In sum, Monaco currently has no NC ratings, R.(14,20,21,30) are rated at C, and all other ratings are either rated at PC or LC.
Monaco is invited to the enhanced follow-up procedure and will report back in December 2024.