European Union governments are set to block the European Commission’s draft dirty money blacklist after all 28 EU member states objected to the way countries were selected for their alleged anti-money laundering deficiencies.
EU members government representatives further claimed that jurisdictions included on the list were not given enough time to contest the findings.
EU justice commissioner Vera Jourova last month released a blacklist of 23 non-EU countries that included new countries like Saudi Arabia, Panama and Nigeria, which, the commission said, have strategic deficiencies in their anti-money laundering and counter-terrorism financing frameworks. The list is based on new EU rules to prevent money laundering as part of a process agreed with EU member states last summer.
Diplomats briefed journalists last weekend that all EU member countries had voiced their concerns over the list, which was due to be formally rejected on Thursday.
The money laundering blacklist would have severe consequences as it requires banks in the EU to apply enhanced due diligence measures to all transactions involving individuals and entities from listed countries.
The initial release of the list prompted heavy rounds of lobbying by Saudi Arabia and the United States, which saw its territories of American Samoa, the U.S. Virgin Islands, Puerto Rico and Guam described as having lax anti-money laundering standards.
The U.K. government lobbied on behalf of Saudi Arabia before the list was published.
Saudi Arabia’s King Salman bin Abdulaziz Al Saud sent a letter to one EU government, according to the POLITICO news site, stating the blacklist “will damage its reputation on the one hand, and will create difficulties in trade and investment flows between the kingdom” and the EU. The king “urged” the country’s “representatives in the Council to support the position of the Kingdom and reconsider this decision.”
The U.S. Department of the Treasury rejected the inclusion of its territories, calling the process of establishing the list “flawed” and considerably different from the methodology used by the Financial Action Task Force, the global standard-setter in the industry.
In addition, the Treasury Department lamented an insufficient review mechanism without enough time for jurisdictions to challenge their inclusion.
EU parliamentarians, in turn, have in the past called for a much larger number of jurisdictions to be included on the list. Last week, 29 MEPs sent a letter to the European Commission stating that they “strongly oppose any kind of political interference in the process of identification of high-risk countries.”