Money laundering, Monte Carlo risks 'grey list'. Dirty money from Italy and France

Its thriving real estate market, where a square metre can sell for as much as EUR 120,000, and its three casinos are also considered risk factors. 'Its international profile, particularly through the banking and financial services it offers, makes it a prime target for suspicious financial flows,' Moneyval analysts wrote in their 2023 report. In most cases where it is identified, the predicate offence is committed abroad and the proceeds of the crime are laundered in Monaco. For the most part, these proceeds come from neighbouring jurisdictions, particularly France and Italy'.

If Monaco were to be added to the grey list, the result would probably be detrimental to its economy. The principality would be subject to increased regulatory scrutiny and some investors might be reluctant to do business in the country.

According to Moneyval, 'the money laundering threat stems mainly from predicate offences committed abroad. The countries most likely to be involved are France and Italy, then Russia and Belgium. Fraud in the broadest sense (including fraud, embezzlement, forgery and the use of forged documents) is the main predicate offence (36%), followed by bribery and trading in influence (29%) and then to a lesser extent VAT fraud and corporate tax fraud (9%)'.

Again according to Moneyval, the main business sectors at risk of money laundering are, in descending order, banks, asset management companies, real estate agents, yacht companies and sports agents.

The report also highlighted the risks associated with the approximately 20,000 companies registered in the Principality. The main risk is associated with partnerships in the real estate sector and limited liability companies in the yachting sector. Then there are the LLCs in the financial or real estate sector and the other types of civil law companies. Civil companies account for 79% of all entities registered in Monaco. Monaco's public limited companies (Sam) also present a high level of risk.

The analysis also emphasised that limited liability companies (SARLs) are vulnerable to money laundering risk due to their recent introduction (this legal form was created in 2007) and their very rapid development (they accounted for 14% of Monegasque companies in 2021, but 68% of commercial companies), the applicable capital requirements and limited external supervision. Sarl companies, including those with activities in the nautical, management, financial and real estate sectors, are classified as high risk.

Other critical aspects noted by Moneyval's experts concern the judicial system, which does not always appear capable of combating money laundering. With the reform of the Criminal Code in 2018, a money laundering presumption mechanism was introduced. This was an important step forward but has so far led to only one conviction, moreover not final, in 2021.

Furthermore," Moneyval's experts explained in the report, "in Munich, unlike other jurisdictions, there is no time limit for filing appeals and no restriction on the number of times the same legal issue can be raised. This increases the duration of court proceedings.

The report also listed the number of individuals who should act as 'watchdogs' in the fight against money laundering with their suspicious reports. At the end of 2020, there were three notaries, three bailiffs, 22 defence lawyers, nine other lawyers and one trainee lawyer in Monte Carlo.

Monaco also had 83 insurance agents or brokers who sell life insurance policies or other forms of insurance related to investments. Then, three money changers and one pawnbroker. There are three casinos, 151 real estate agents, 77 legal advisors, 47 certified public accountants and bookkeepers, 144 jewellers-dealers in precious metals and stones, 37 trust and company service providers, 34 trustees, 26 auctioneers and 22 multi-family offices.

Other professionals are also subject to the Anti-Money Laundering Act: 305 real estate dealers, 40 antique and art dealers, 19 motor vehicle dealers, 62 sports agents, one crowdfunding consultant and broker, three Freeport warehouse operators and 172 yachting professionals.