Monaco leaves the FATF grey list, but enhanced due diligence still applies in the EU

On 30 October 2026, at the close of its plenary meeting in Paris, the Financial Action Task Force (FATF) removed Monaco from its list of jurisdictions under increased monitoring, better known as the grey list. The Principality had been on it since June 2024, because of weaknesses in its anti-money laundering and counter-terrorist financing (AML/CTF) framework.

If you are a compliance officer in Luxembourg or another EU country, the decision does not, for now, allow lighter checks on clients linked to Monaco. Monaco is also on a second list, the European Commission’s list of high-risk third countries, and that is the list which triggers enhanced due diligence within the EU.

Two years of reforms recognised by the FATF

The FATF based its decision on the progress reports submitted by Monaco and on an on-site visit in September 2026. According to the Prince’s Government, the reforms since 2024 covered the understanding of risks, including those linked to tax fraud committed abroad, international cooperation in criminal matters, the seizure and confiscation of suspected criminal assets, and stronger sanctions against professionals who breach their obligations, including on beneficial ownership transparency.

The Monaco Financial Security Authority (AMSF), which supervises obliged professionals and acts as the financial intelligence unit, has quadrupled its staff and will employ 80 people by the end of 2026 (Prince’s Government).

The Government does not see the decision as a finish line: Monaco is preparing for its next evaluation by MONEYVAL, the Council of Europe body that assesses AML/CTF frameworks.

An EU list separate from the FATF’s

Within the EU, high-risk third countries are identified by the Commission, in the annex to Delegated Regulation (EU) 2016/1675. Monaco was added by Delegated Regulation (EU) 2025/1184 of 10 June 2025, published in the Official Journal on 16 July 2025. It entered into force on the twentieth day after publication, on 5 August 2025.

The Commission uses the FATF lists as a starting point but adds its own assessment, and every change to the EU list requires a new delegated regulation. Leaving the grey list therefore does not remove Monaco from the EU list automatically. As of the publication of this article, no delegated regulation removing Monaco has been published.

An enhanced due diligence duty that still applies

As long as Monaco remains on the EU list, Article 18a of Directive (EU) 2015/849, as transposed by each member state, requires obliged entities, the professionals who must apply AML/CTF measures, to apply enhanced due diligence to any business relationship or transaction involving the country. The measures are:

• obtaining additional information on the customer and on the beneficial owners;
• obtaining additional information on the intended nature of the business relationship;
• obtaining information on the source of funds and source of wealth of the customer and of the beneficial owners;
• obtaining information on the reasons for the intended or performed transactions;
• obtaining senior management approval to establish or continue the business relationship;
• conducting enhanced monitoring of the relationship, by increasing the number and timing of controls.

The framework changes on 10 July 2027, when Regulation (EU) 2024/1624 applies. The Commission will still identify high-risk third countries through delegated acts (Article 29), and the enhanced due diligence measures will be set out in Article 34 of the Regulation, which applies directly in every member state.

A country risk that still needs assessing

Once the Commission removes Monaco from its list, the specific duty for high-risk third countries will no longer apply. That will not make a client linked to Monaco a low-risk client. Under a risk-based approach, the country is one factor among others: the client’s activity, the complexity of its structure, the source of its funds and the consistency of its transactions still decide how much due diligence is needed.

When that review comes, it needs to be documented: an auditor will expect a reasoned decision for each client concerned, not just a changed setting.

Enhanced due diligence on record in Smart Oversight

Enhanced due diligence rests on your compliance officer’s judgement, which no software replaces. A tool such as Smart Oversight makes it easier to carry out, and keeps a record of each step of the business relationship.

The link with Monaco shows as soon as the client record is filled in. The country lists in the app flag jurisdictions on the FATF and EU lists, and Monaco is now flagged only for the EU list. The flag appears next to the nationality, country of birth, address and tax residence of a natural person, or the country of incorporation of a legal person. Beneficial owners, directors and shareholders are linked to the client record and can be screened in their own right.

The risk level is then set either directly by the compliance officer or through a risk scoring questionnaire, whose templates you adapt to your business. The country flag does not change the risk level by itself: the decision stays with you, in line with the risk-based approach.

Documents collected for enhanced due diligence, such as evidence of the source of funds or source of wealth, go into the lists of required documents you set up in the app. Each one is attached to the client file and carries a status, from requested to validated.

Enhanced monitoring means more frequent periodic reviews: screening frequency is set by risk level and by source, whether sanctions lists, PEP lists or negative media. Alerts can also go through two levels of review: a team member reviews them, then the compliance officer, the only role allowed to take this step, validates them.

The whole process is recorded in the client’s dated PDF report, which includes the alert history and the answers to the risk scoring questionnaire. That report is the audit trail you show the auditor.

Further reading

The other decisions of the October 2026 plenary, and the gaps between the FATF and EU lists, are covered in October 2026 FATF plenary: what the updated lists change for your due diligence. Setting review frequencies by risk level is covered in Ongoing monitoring: periodic client reviews based on risk level. The integrations page lists what the Smart Oversight API covers today, if you want to connect these checks to your CRM. To organise enhanced due diligence in Smart Oversight, contact our team.

FATF source

FATF (October 2026), Jurisdictions under Increased Monitoring, 30 October 2026, https://www.fatf-gafi.org/en/publications/High-risk-and-other-monitored-jurisdictions/increased-monitoring-october-2026.html. Licensed under CC BY 4.0.