The European Commission published a six-point anti-money laundering action plan last week that includes the proposal for a new EU AML authority and better alignment of its third-country blacklist with the Financial Action Task Force list of non-cooperative countries and territories.
The commission’s plan said the EU needs to adjust its approach to third countries with deficiencies in their regime regarding AML and countering terrorist financing. It issued a new methodology that it said was more in line with that of the FATF.
“We are determined to step up our efforts so that we are a single global actor in this area,” the commission said when publishing the plan for public consultation, which is open for feedback from authorities, stakeholders and citizens until 29 July.
In addition to the proposed new methodology to identify high-risk third countries that pose a threat to Europe’s financial system, the commission adopted a new anti-money laundering blacklist.
The commission added The Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Panama and Zimbabwe to its list. Countries already on the list are Afghanistan, Iraq, Vanuatu, Pakistan, Syria, Yemen, Uganda, Trinidad and Tobago, Iran and North Korea.
All countries except North Korea have committed to changing their rules in order to better tackle money laundering and terrorism financing.
At the same time, Bosnia-Herzegovina, Ethiopia, Guyana, Lao People’s Democratic Republic, Sri Lanka and Tunisia were removed.
The commission amended the list in the form of a Delegated Regulation, which has to be approved by the European Parliament and Council within one month. Because of the coronavirus crisis, the regulation and any new protective measures, such as access restrictions to EU funding, will only apply from 1 Oct. 2020. However, the delisting of countries will take effect 20 days after publication in the Official Gazettes.
The commission’s action plan seeks to establish a single EU anti-money laundering rulebook and ensure the effective application of EU rules.
It is currently up to each member state to individually supervise these rules, therefore gaps can develop, the commission said, and proposed setting up an EU-level supervisor.
Markus Ferber, a German lawmaker with the European People’s Party in the European Parliament, told Reuters that “to fight money laundering in the financial system effectively, competences must be streamlined in a stand-alone EU anti-money laundering body”.
He said, “This is the kind of problem that warrants a dedicated EU agency to tackle it.”
The commission’s action plan is motivated by recent money-laundering scandals involving banks in the Baltics and aims to plug the remaining loopholes in EU rules.
It is also in response to an invitation by the European Parliament and the Council to investigate what steps could be taken to achieve a more harmonised set of rules; better supervision, including at EU level; as well as improved coordination among financial intelligence units.
Cayman’s anti-money laundering regime is currently under review by the FATF. In March 2019 Cayman received a critical report from a regional FATF-affiliate, the Caribbean Financial Action Task Force.
The report prompted a slew of changes to local laws and regulations to address the deficiencies identified by the report. The FATF will decide in July if these measures were sufficient.