Monaco added to anti-money laundering ‘grey list’

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Monaco has been added to the anti-money laundering “grey list” of countries subject to increased monitoring.

The principality is deemed to have “strategic deficiencies” in its money laundering and terrorist financing safeguards, global watchdog the Financial Action Task Force (FATF) said on Friday.

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Monaco and Venezuela were added to the list of jurisdictions requiring further scrutiny at the FATF’s plenary meeting in Singapore.

Jurisdictions on the grey list will be expected “to implement an action plan to resolve swiftly the identified strategic deficiencies within agreed timeframes”.

The FATF said Monaco has made a “high-level political commitment” to strengthen its anti-money laundering and terrorism financing regime.

“Since the adoption of its mutual evaluation report (MER) in December 2022, Monaco has made significant progress on several of the MER’s recommended actions including by establishing a new combined financial intelligence unit (FIU) and AML/CFT supervisor, strengthening its approach to detecting and investigating terrorism financing, implementing targeted financial sanctions and risk-based supervision of non-profit organisations,” said an FATF statement.

Monaco will continue to work with FATF in six key areas including “strengthening the understanding of risk” in relation to money laundering and tax fraud, increasing the rigor if its identification and seizure of criminal assets abroad, enhancing sanctions for  AML/CFT breaches and “increasing the seizure of property suspected to derive from criminal activities”.

Monaco-based Ian Petts, partner, Jaffa Prive wrote on LinkedIn: “As a result, corporate service providers, banks, financial entities, MFOs, Trust companies will be implementing some of the toughest KYC on clients.

“A client not willing to share intimate details will be instantly rejected. No one will take the risk.”

Petts said the “natural conclusion” would be “heavy penalties, disciplinaries and strike-offs” but he added the reputational damage could be short-lived.

“Malta was off the grey list within six months and people have very short memories,” he said. “Only clients hesitating between jurisdictions will maybe put off. In fact, some say the grey listing gives more promotion for Monaco.”

Patrick Coote, MD Europe, Northrop & Johnson said: “For those of us in Monaco, working closely with UHNW clients to handle the sale, charter and management of their high value assets, this latest development is disappointing but not unexpected.

“Since our bar is already high, we do not anticipate this new situation having a material impact on our internal procedures. Whether or not there is an impact on the market remains to be seen.”

Monaco is the highest-profile European nation on the list. In the same session, Turkey and Jamaica were taken off the grey list for making “significant progress” in their anti-money laundering regimes.

The Paris-based FATF monitors more than 200 nations and jurisdictions to prevent money laundering and the financing of terrorism.

It also has a black list for jurisdictions which are deemed to be high risk.

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