The renowned international financial centre woke up yesterday to unwelcome news that the executive arm of the EU has put it on a list of places falling significantly short on AML and other controls. On the other hand, several IFCs, including Gibraltar, the UAE and Panama, came off this list.

The European Commission yesterday included Monaco in its updated list of high-risk jurisdictions, presenting strategic deficiencies in their national anti-money laundering and countering the financing of terrorism regimes.

By contrast, jurisdictions including Gibraltar, Panama and the United Arab Emirates were removed from its high-risk list.

In total, the following “third-country jurisdictions” were put on the Commission’s high-risk list: Algeria, Angola, Cote d'Ivoire, Kenya, Laos, Lebanon, Monaco, Namibia, Nepal and Venezuela.

The executive arm of the European Union said the EU entities covered by the anti-money laundering framework must apply “enhanced vigilance in transactions involving these countries.” “This is important to protect the EU financial system,” the EU said.

For Monaco, home to several private banks and advisors to HNW and ultra-HNW clients, the decision will come as a blow. This publication has heard from its contacts that over recent years Monaco has been under significant scrutiny, making the onboarding of new clients more onerous.

The Commission said the updated list takes into account the work of the Financial Action Task Force, an intergovernmental group fighting money laundering, and in particular its list of “Jurisdictions under Increased Monitoring.” 

“Alignment with FATF is important for upholding the EU´s commitment to promoting and implementing global standards. The Commission has carefully considered the concerns expressed regarding its previous proposal and conducted a thorough technical assessment, based on specific criteria and a well-defined methodology, incorporating information collected through the FATF, bilateral dialogs and on-site visits to the jurisdictions in question,” it said. 

The EU Commission’s moves appear to run counter to a report, published at the end of December 2024, stating that Monaco has “improved measures to combat money laundering and financing of terrorism,” according to MONEYVAL, the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism. “Since the adoption of its mutual evaluation report (2022), Monaco has taken numerous steps to strengthen its anti-money laundering and terrorist financing systems.”

(Editor’s note: The apparently contradictory reports may raise questions about the value of such lists of “good” and “bad” jurisdictions in terms of guiding booking center policy and the activities of clients.)