Anti-money laundering and terrorist financing measures: Monaco placed under increased monitoring

On January 23rd, 2023, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, Moneyval (a permanent monitoring body of the Council of Europe established in 1997), published its Fifth Evaluation Report on measures taken in the Principality of Monaco.


Moneyval is responsible for assessing compliance with the principal international standards to counter  money laundering and the financing of terrorism and the effectiveness of their implementation, as well as with the task of making recommendations to national authorities in respect of necessary improvements to their systems to effectively improve their capacity to fight these risks, in accordance with the 40 recommendations of the FATF (Financial Action Task Force, an intergovernmental body for the fight against money laundering and terrorist financing).

The Council of Europe was the first international organisation to highlight the need to take action to counter the dangers that money laundering poses to democracy and the rule of law. Indeed, money laundering, the process by which criminals give an appearance of legitimacy to the source of the proceeds of crime, is a growing and increasingly international phenomenon. In addition, organised terrorist groups also misuse the global financial system to finance their illegal operations, creating a serious risk that financial institutions will be used to hide terrorist money.


The report states that Monaco faces significant money laundering risks, mainly due to "internationally oriented financial activities". The Principality is a potential "prime target" for illicit cross-border financial flows, according to the Council of Europe. In essence, the frauds would be committed abroad, while the proceeds of the crime would be laundered in Monaco.


Moneyval has highlighted certain vulnerabilities in the measures taken by the Principality of Monaco, and has proposed various necessary improvements to the Monegasque system, at the risk of slipping back onto a grey list drawn up by the OECD (Organisation for Economic Co-operation and Development) and which is intended to be public. Indeed, the country was on the grey list of so-called "non-cooperative" countries until 2009 and the G20 also placed Monaco on the grey list of tax havens in April 2009.

Monaco is now under the supervision of the FATF, which means that the country is committed to quickly resolving the identified strategic deficiencies within the agreed timeframe, i.e. March 2024.


Although the Principality of Monaco has never been at the heart of an international money laundering or terrorist financing case, it is criticised for a "modest" number of money laundering investigations, and a "very low number of convictions obtained, as well as an even lower number of confiscation measures ordered". Regarding financing of terrorism, the report calls for "major improvements in the transparency of legal persons, and in investigation and prosecution".

Major improvements are also needed « to enhance the Principality's effectiveness in international cooperation". The report states that extradition requests to Monaco are rejected in one out of two cases.


Notwithstanding these criticisms, Moneyval "recognises the considerable work undertaken by Monaco in identifying the risks" associated with money laundering. But "further work is needed" in certain sectors, notably casinos, business service providers, virtual assets and financial flows. Moneyval also agrees that "overall, the Monegasque legal framework is adapted to the implementation of targeted financial sanctions at international, European and national level, and the new system set up in the Principality is beginning to prove its effectiveness", even if some delays have been observed in the transposition of the regulations until May 2021. It should also be remembered that this audit took place in March 2022, at the end of the unprecedented crisis of the COVID.


Following the visit of the Moneyval experts, Monaco had reacted by creating a follow-up committee responsible for adopting the recommendations of the Moneyval report under the authority of the Minister of State, Pierre Dartout. The Monaco Government allocated a substantial budget for the recruitment of experts in various government departments, in particular SICCFIN (Service d'Information et de Contrôle sur les Circuits Financiers). It was also decided to use specialised consultancy firms whenever necessary. The National Council passed five pieces of legislation in December 2022, including on the "seizure and confiscation of instruments and proceeds of crime", "the fight against money laundering, terrorist financing and corruption", and "the amendment of the code of criminal procedure concerning international mutual legal assistance". Important legislative developments are expected to continue in 2023. In parallel, a register of beneficial owners has been deployed and a register of trusts should be created in 2023. Finally, SICCFIN has been equipped with a tool called "STRIX" since the beginning of the year, which allows for a risk-based approach and is adapted to the supervision of the various sectors of activity subject to the Principality. 

The Government of Monaco has expressed its full support for the recommendations made in the Moneyval report. The number of immediate measures put in place to comply with the best international standards in the fight against money laundering and terrorist financing demonstrates this.


Today, both the State departments and the private sector are mobilised to preserve the attractiveness of the Principality, which includes implementing the actions recommended by the Moneyval report, and thus preserving the excellent reputation of the Monegasque marketplace since 2009 with its inclusion on the OECD's so-called "white list" in terms of tax transparency.

Moneyval will review Monaco's case again in December 2024