Monaco could soon be added to an intergovernmental “gray list” of countries pressured to clamp down on money laundering, if regulators determine that the wealthy principality hasn’t made enough progress prosecuting financial crimes.
The Financial Action Task Force, an international organization that sets regulatory standards to protect financial systems, is expected to announce its decision regarding adding Monaco to the gray list on June 28, Bloomberg reported.
This follows previous scrutiny from European inspectors, who noted deficiencies in Monaco’s prosecution of money laundering.
“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,” the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, known as Moneyval, said in a January 2023 report.
The January 2023 report noted that while Monaco had taken steps to identify money-laundering and terrorist financing threats, its authorities were limited by a lack of information and investigation regarding financial crimes.
As one of the wealthiest countries in the world, Monaco is considered to be especially vulnerable to financial threats. It has the highest concentration of millionaires and billionaires and is noted for its luxury housing and opulent casinos.
“[Monaco’s] international profile, particularly through the banking and financial services it offers, makes it a prime target for suspect financial flows,” Moneyval analysts wrote in the 2023 report.
“In most cases where it is identified, the predicate offense is committed abroad and the proceeds of the crime are laundered in Monaco. For the most part, these proceeds originate from neighboring jurisdictions, especially France and Italy.”
If Monaco is added to the gray list, the outcome would likely be harmful to its economy. The principality will be subject to greater regulatory scrutiny and some investors might balk at doing business in a greylisted country.
In 2022 the United Arab Emirates were added to the gray list – prompting Emirati officials to prioritize reforms. The UAE was removed from the list in February after reportedly taking steps to address financial offenses – including allowing other countries to more easily extradite people accused of white-collar crime.