The Financial Action Task Force (FATF) announced that it had added the Principality of Monaco to the “grey list” of countries now subject to increased monitoring. The news takes no one by surprise. In fact, at the beginning of January 2023, the Council of Europe’s anti-money laundering body, Moneyval, had encouraged the Principality of Monaco to further strengthen measures to combat money laundering and terrorist financing. During the same year, the Principality responded with a law that increased financial and corporate transparency.; but a year and a half after the international committee’s recommendation, the Principality’s attempts to become more transparent still did not seem sufficient. And so, during a plenary meeting held in Singapore on June 28, the FATF included Monaco in the “grey list”. With it, Venezuela was added to the list of nations considered to have “strategic deficiencies” in combating money laundering and terrorist financing.
Because Monaco is at risk of money laundering
The January 2023 report provided a comprehensive assessment of the country’s level of compliance with Financial Action Task Force (FATF) recommendations based on what was observed during a visit conducted in March 2022. Moneyval recognized Monaco as having shown a moderate level of effectiveness in international cooperation.in the application of preventive measures to combat money laundering and terrorist financing and in the application of the United Nations targeted financial sanctions against the proliferation of weapons of mass destruction. But the report also indicated the need for major improvements relating to the transparency of legal entities, as well as investigation and prosecution of terrorist financing. Improvements that were defined as radical for a reality, that of the Principality which, due to its high concentration of millionaires, is considered particularly fragile with respect to anything that is a financial threat. Not to mention the three casinos and its real estate market, where a square meter can be sold for up to 120 thousand euros: all factors that make the Grimaldi kingdom vulnerable to money laundering.
Dirty money that comes mainly from Italy and France
But at this point in the relationship, Italy also came into play: our country, in fact, was identified together with France as the starting point of the flows of dirty money that land in the Principality (followed by Russia and Belgium). The Moneyval report stated that «the international profile, in particular through the banking and financial services it offers (Monaco, ndr), makes it a prime target for suspicious financial flows. In most cases where it is identified, the underlying crime is committed abroad and the proceeds of the crime are laundered in Monaco. For the most part, these proceeds originate from neighboring jurisdictions, particularly France and Italy.
Every year the equivalent of the Italian GDP is recycled
Every year, between 2% and 5% of global gross domestic product is recycled around the world, according to United Nations data.. A figure that varies between 800 and 2 thousand billion dollars (in the latter case we are not far from the annual GDP of Italy). Money laundering occurs when a private individual or a company tries to transform the proceeds of an illicit operation as if they came from a legal activity. To monitor the vulnerability of countries to these crimes, the Fatf draws up two different lists every 6 months, a “black” one, the “blacklist”, which includes countries with compromised financial systems, and a “grey” one, the “graylist”, with financial assets that are at risk of being compromised. Inclusion in these lists does not imply any mandatory changes or reform obligations, but it does modify the reputation that a country has with respect to the members of the group.
The risks for Monaco
In Monaco, having ended up on the “grey list” alarmed the prince, the court and the rest of the Principality’s nomenclature. The economic backlash for the Principality is in fact almost certain. The increased regulatory controls to which it will be subject could cause a certain number of investors to flee, i.e. those operating in Monaco’s main business sectors at risk of money laundering: banks, asset management companies, real estate agents and intermediaries, yacht companies and, of course, sports agents…
