E.U. Nations Reject European Commission Money Laundering Blacklist

In a rare rebuke, all 28 EU countries rejected the European Commission's list of countries deemed high-risk for their failure to take adequate measures to prevent the financing of terrorist groups and money laundering.

March 07, 2019 at 06:08 PM

3 minute read

By Simon Taylor

The E.U.'s member states have unanimously rejected a list of countries that have been deemed by the European Commission to pose a high risk of money laundering and terrorist financing.

The list of 23 countries, which includes Saudi Arabia and the U.S. Virgin Islands, includes countries considered high risk because they do not take adequate measures to prevent the financing of terrorist groups and money laundering. Member states dealing with the countries on the list are supposed to take special steps to address the higher risk of money laundering and terrorist financing.

But in a rare unanimous rejection of a proposal from the European Commission, the E.U.'s executive arm, all 28 E.U. countries rejected the list and requested that the commission draft a new one. They said the proposal "was not established in a transparent and resilient process that actively incentivises affected countries to take decisive action while also respecting their right to be heard".

The list includes such nations as Saudi Arabia, North Korea and Nigeria, and four U.S. overseas territories. The U.S. had earlier criticised the list, saying it was developed using a flawed process.

The U.K. Government stressed in a statement that it is a world leader in the fight against money laundering and terrorist financing but it could not approve the list for various reasons.

"We, along with the majority of other member states, have concerns over the process and methodology used to produce this regulation," the government said in the statement. "We will continue to work with the commission and other member states to ensure that the list that comes into force is as effective as possible in tackling illicit finance, and encouraging affected countries to take action."

The list is an essential part of the E.U.'s fifth directive on anti-money laundering and terrorist financing, which requires the bloc to identify third-country jurisdictions that have "strategic deficiencies" in their anti-money laundering and terrorist financing regimes and that "pose significant threats to the financial system of the E.U.".

The commission drew up the list following an analysis of 54 priority jurisdictions. The countries were assessed because they met one or more of a number of criteria: they have a "systemic impact on the integrity of the E.U. financial system"; they have been reviewed by the International Monetary Fund as international offshore financial centres; and they have economic relevance for and strong economic ties with the E.U.

The commission also took into account the work of the Financial Action Task Force, the international standard-setter for combating terrorist financing.

The list of 23 countries is: Afghanistan, American Samoa, The Bahamas, Botswana, Democratic People's Republic of Korea, Ethiopia, Ghana, Guam, Iran, Iraq, Libya, Nigeria, Pakistan, Panama, Puerto Rico, Samoa, Saudi Arabia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, U.S. Virgin Islands, Yemen.