Monaco is going double grey – FATF & EU.

Monaco faces a new era of scrutiny as the European Commission moves to add the principality to its high-risk third country list, better known as the “grey list.”

This follows the Financial Action Task Force’s (FATF) decision in 2024 to increase Monaco's monitoring for strategic deficiencies in its anti-money laundering (AML) and counter-terrorist financing (CFT) framework.

• https://www.fatf-gafi.org/en/countries/detail/Monaco.html

This potential EU grey listing, which still requires approval by the European Parliament, has significant implications for compliance professionals, financial institutions, and cross-border investors, especially given Monaco’s reputation as a private wealth hub closely intertwined with European and global markets.

Monaco's inclusion on the FATF and EU grey lists signifies a critical juncture for the principality. Here are the key implications:

1. Enhanced Scrutiny: Financial institutions and compliance professionals must apply stricter due diligence measures for Monaco transactions. This includes verifying the source of funds, identifying beneficial owners, and closely monitoring transactions.
2. Increased Reporting Obligations: Entities dealing with Monaco will face heightened reporting requirements to ensure transparency and detect suspicious activities. This means more frequent and detailed reports to regulatory bodies.
3. Regulatory Pressure: The double grey listing will significantly pressure Monaco to address deficiencies in its anti-money laundering (AML) and counter-terrorist financing (CFT) frameworks. This could lead to substantial reforms and stricter enforcement of existing regulations.
4. Impact on Business Relationships: The heightened scrutiny may affect Monaco's attractiveness as a private wealth hub. Financial institutions might reconsider their business relationships with entities in Monaco to avoid the increased compliance burden.
5. Reputational Risk: Being on both grey lists can damage Monaco's reputation in the global financial community, potentially leading to a loss of investor confidence and a decrease in foreign investments.

Overall, this situation necessitates Monaco's proactive approach to strengthening its AML/CFT measures and regaining its standing in the international financial system.

As of February 2025, the Financial Action Task Force (FATF) has placed the following countries under increased monitoring, commonly referred to as the "grey list" :

• Algeria
• Angola
• Bulgaria
• Burkina Faso
• Cameroon
• Côte d'Ivoire
• Croatia
• Democratic Republic of Congo
• Haiti
• Kenya
• Lao People's Democratic Republic
• Lebanon
• Mali

• Monaco

• Mozambique
• Namibia
• Nepal
• Nigeria
• South Africa
• South Sudan
• Syria
• Tanzania
• Venezuela
• Vietnam
• Yemen

These jurisdictions actively work with the FATF to address strategic deficiencies in their anti-money laundering (AML) and counter-terrorist financing (CFT) frameworks.

References

"Black and grey" lists - Financial Action Task Force https://www.fatf-gafi.org/en/countries/black-and-grey-lists.html

FATF Grey List Update Feb.2025 | Global Compliance Institute https://www.gci-ccm.org/news/fatf-grey-list-update-feb2025

EU Push to Grey List Monaco Triggers Unprecedented Scrutiny for ...https://fincrimecentral.com/monaco-grey-list-eu-aml-compliance-impact-2025/

Entry into the Grey List for Monaco: the consequences of the FATF - Petrini https://www.petrini.mc/en/monaco-grey-list-fatf-impacts.html