Monaco set to join dirty money “grey list” next week

Monaco, famed haven for the global elite, faces a financial reckoning as it risks landing on the FATF's "grey list" for insufficiently combatting money laundering. Despite recent efforts, persistent failings flagged since 2022 could prompt increased monitoring, denting the principality's prestige and investor confidence. With its economy heavily reliant on financial services, Monaco's bid to avoid scrutiny hinges on international consensus amid mounting pressure from global watchdogs. A pivotal decision looms at the FATF's upcoming plenary in Singapore..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..Join us for BizNews' first investment-focused conference on Thursday, 12 September, in Hermanus, featuring top experts like Frans Cronje, Piet Viljoen, and more. Get insights on electricity and exploiting SA's gas bounty from new and familiar faces. Register here..By Ben Bartenstein, Anthony Cormier and Gaspard Sebag.Monaco, home to the world's highest concentration of millionaires and billionaires, is at risk of being added to an international financial "gray list" as soon as next week for not making enough progress in tackling illicit flows of money. .___STEADY_PAYWALL___.The Financial Action Task Force is expected to publicly identify the principality as requiring increased monitoring to address strategic money laundering deficiencies on June 28, the last day of its plenary in Singapore, according to people familiar with the matter, who requested anonymity as the matter is private..Despite some advances in recent months, the people said that important failings remain since European inspectors rebuked Monaco in late 2022 for its ineffective prosecution of money laundering. No final decisions have been made, and listings are decided based on a consensus among the FATF's members..FATF's recommendations are taken seriously because no nation wants to be flagged for deficiencies that might cast doubt on the integrity of its banking system. Those added to the list require closer monitoring and the designation can make foreign investors more wary of doing business there. A 2021 International Monetary Fund report finding that gray-listed countries experienced "a large and statistically significant reduction in capital inflows." .That would hurt Monaco's economy. Its financial institutions had about €160 billion ($172 billion) under management at the end of 2023, some 20 times the country's gross domestic product. The property market of Monaco, which is smaller in size than New York's Central Park, is the priciest in the world..Read more: National Treasury: SA triumphs against money laundering deficiencies; celebrates removal of technical compliance gaps.UAE Example.Monaco would be one of the highest profile jurisdictions hit with the designation since the United Arab Emirates was added to the gray list in March 2022. That move seen as among the most significant steps in FATF's history, given the country's position as the main financial hub of the Middle East..The Gulf state was removed in February after Emirati officials made it a political priority to escape the designation, tightening scrutiny on various nationalities and paving the way for high-profile extraditions of individuals accused of white-collar crimes..The move would come at a critical time for Monaco, which has faced a series of crises. After multiple political scandals in the past half decade, Prince Albert II cut ties with several of his closest aides last year and is now locked in a public spat with one of them. The principality faces scrutiny not just from the FATF but also from the Group of States Against Corruption, or Greco, which is expected to issue a report by this summer examining the government's ability to stamp out bribery..The FATF didn't respond to a request for comment. Palace and Monaco government representatives declined to provide a statement, while the government of Monaco didn't immediately respond to requests for comment..Founded more than three decades ago at the initiative of the G7, the Paris-based FATF has roughly 40 members, including the US and China as well as the European Commission and the Gulf Cooperation Council. The group aims to tackle money laundering and terrorist financing by discouraging investment in non-compliant countries via its gray list and black list..Several topics will be on the agenda of its behind-closed-doors plenary, which begins next week. Turkey is expected to be removed from the gray list, Bloomberg reported last month. Reports evaluating the systems in place in India and Kuwait are also set to be discussed. For Monaco, which is not a member of FATF, the group has relied on an analysis carried out by a regional anti-money laundering body, the Council of Europe's Moneyval. .In 2022, a team of inspectors from Moneyval visited the city-state, whose French Riviera coastline has long attracted billionaire investors and athletes. The committee ultimately gave Monaco its worst effectiveness rating for the way the country prosecutes money laundering and recovers assets..Moneyval noted that Monaco prosecutors had won just six convictions in "simple" cases since 2017, and described an archaic system for flagging questionable transactions: Suspicious activity reports, a cornerstone of financial investigations, were still handled by snail mail. Overall, inspectors found Monaco "did not have a strategic approach" to tackling money laundering. .That Moneyval evaluation and steps made by Monaco to address its deficiencies will form the basis for discussions during the FATF's plenary..To avoid the gray-list designation, a significant majority of FATF members must agree that a country has made sufficient progress since its evaluation period began. .Currently there are roughly 20 countries spanning several continents on the gray list, including Nigeria, South Africa, Bulgaria, the Democratic Republic of Congo, the Philippines and Syria. A gray-list classification isn't as punitive as the group's highest-risk "black list," and it suggests that Monaco officials are taking steps to address current shortcomings, the people said..Read also:.🔒 UAE nears exit from FATF 'grey list' following robust crackdown on illicit finance🔒 Outgoing Nedbank CEO says SA faces an uphill battle to escape global dirty-money monitoring listSouth Africa makes strides to exit FATF greylist with compliance upgrades.© 2024 Bloomberg L.P.

Monaco set to join dirty money “grey list” next week

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