PARIS - Author W. Somerset Maugham once described Monaco as "a sunny spot for shady people." Last week, the French Parliament offered a few more details.
In a scathing 400-page report, the Parliament said that the tiny principality - a famous refuge for wealthy tax dodgers - is an ideal place to launder money.
It accused Monaco of having deliberately put into effect lax banking laws - including a guarantee of anonymity - to attract wealthy depositors. And it said that the monetary surveillance systems are so poor that even if Monaco officials wanted to cooperate in international efforts to prevent money laundering, they could not.
"Monaco is one of the most hypocritical territories when it comes to the fight against money laundering," said Arnaud Montebourg, one of the Socialist members of Parliament who helped to write the report. "A loose system is not just tolerated there; it was created on purpose."
Control systems are not functioning properly, the report said. One French auditor described inspecting more than 260 files that should have contained information about the identity of depositors. He found that a quarter of them were empty.
The parliamentary report recommended that France review its accords with Monaco, some of which date back hundreds of years. Unless changes are made, the report said, France - which provides Monaco with top civil servants and supervises its lending agencies - is in danger of losing its credibility in the fight against money laundering.
The report also questioned why France should continue to contribute to the upkeep of the Mediterranean resort, especially when the principality's main goal "appeared to be to let some of the wealthiest citizens in the world get away without paying taxes."
France shares its sales tax proceeds with Monaco under a formula that most experts say favors Monaco.
Money laundering and banking practices have been a hot topic in Europe. France's report on Monaco came the day after members of the European Union reached an agreement in principle on sweeping changes in bank secrecy laws, intended to bring cross-border investment income within the net of tax authorities.
Under the agreement, all 15 European Union states will exchange information on nonresidents' savings. That is intended to prevent tax evasion by people who place their investments in secret accounts in another European Union member country or elsewhere abroad.
The plan faces some major hurdles. It is dependent on the cooperation of the United States, Switzerland and such tax havens as Monaco and Liechtenstein, another principality that has come under scrutiny, in this case by an official from neighboring Austria who claims to have found evidence of money laundering.
Austria, too, has drawn the ire of fellow European Union members for insisting on maintaining a high degree of banking secrecy.
Liechtenstein was among the 15 countries named by an international task force last week as failing to cooperate with the fight against the concealment of illegally earned funds. Other countries on the list included Russia and Israel.
Monaco had also been rumored to be on the list, drawn up by the 26-nation Finance Action Task Force on money laundering. But instead it was placed on the second-tier list.
The report said Monaco had 10 times as many bank accounts as residents and that about 60 percent of the 340,000 accounts belonged to nonresidents.
About 30,000 people live in Monaco, which occupies a choice piece of Mediterranean coast not quite as big as Central Park.
Monaco remained silent on the report. It issued a statement saying only that "it would communicate the observations and comments that it believed were necessary."
The principality has a complicated relationship with France, which provides many of its top functionaries and magistrates.
The French report said that Monaco risks destabilizing markets through a lack of surveillance of its banking and financial sectors, and could hardly succeed in joining the Euro community unless it mends its ways.
"Monaco must choose," the report said. "It is up to it to head for change."