European Council Disowns Money Laundering Blacklist

By Gabriel Vedrenne

EU nations unanimously rejected a proposed blacklist of jurisdictions with poor safeguards against financial crime Thursday, claiming that EU officials did not operate transparently when forming it or give targeted countries a chance to argue against their inclusion.

The plan pitched Feb. 13 by the European Commission, the European Union’s executive branch, would have compelled deeper reviews of future transactions to and from 23 non-EU jurisdictions by placing them on a list of “high-risk third countries” mandated by the bloc’s anti-money laundering directives.

But the proposal surprised many observers by including not only the 13 nations already on a similar list kept by the Financial Action Task Force, but 11 additional jurisdictions as well: Panama, Nigeria, Tunisia, Saudi Arabia and the U.S. territories of American Samoa, Guam, Puerto Rico and the U.S. Virgin Islands.

U.S. officials openly criticized the list within hours of its introduction as Saudi authorities reportedly lobbied EU ambassadors to scrap it. EU nations also did not wait long to show their disapproval, which culminated Thursday with the Council’s decision to reject the plan.

“The current proposal … was not established in a transparent and resilient process that actively incentivizes affected countries to take decisive action while respecting their right to be heard,” members of the Council said in a statement afterwards.

There is no mention of external diplomatic pressure in the statement but reactions to the blacklist among members of the Council were equally negative. All 28 member nations voted against it.

Their criticism appears to have evolved from a Mar. 1 draft statement in which they called for a more “credible” process to create the blacklist.

The final statement issued Thursday ditches that term in favor of “resilient.”

Allegations that the methodology used to form the list is opaque do not appear to square with the Commission’s decision last year to outline the entire process in a publicly available, 37-page report. The document describes all the criteria used to assess nations, as well as the requirement to inform them of their inclusion in advance and allow them to object.

Justice Commissioner Vera Jourova pledged Thursday to begin work on a new list that “addresses member states’ concerns,” but rejected claims that EU officials had worked behind closed doors, used a flawed methodology and ignored third countries’ right to be heard.

“The process was very much transparent,” Jourova said. “I will try to remind them [member states] of the many declarations we made, after the Panama Papers and all the terrorist attacks—we heard a lot of big words then about how we need to strengthen our fight against these things.”

Economic factors may have played a larger role in EU nation’s disavowal of the list than any external pressure. The inclusion of a major commercial partner like Saudi Arabia in and of itself would subject an enormous volume of banking activity to more-rigorous scrutiny.

“The consequences are enhanced due diligence on all transactions with those jurisdictions,” Nicola Finnerty, an attorney with Kingsley Napley in London, told ACAMS before the vote. “This causes significant delay and is resource intensive, which is likely to significantly impact business with those jurisdictions.”

Despite those considerations, the Council’s decision also met with strong disapproval from European lawmakers.

German MEP Sven Giegold, a member of the European Parliament’s special committee on financial crime, said member states “hid themselves behind the methodological matter” instead of stating their true reasons for rejecting the list. Criminals can now “celebrate,” he said.

“If you apply a better methodology, the list would be even longer,” Giegold told “Why is Russia or Dubai not on the list, for example? Why is the United States not on the list when they don’t fully cooperate?”

The European Parliament is scheduled to debate the blacklist on Tuesday.

Contact Gabriel Vedrenne at

Topics : Anti-money laundering , Counterterrorist Financing
Source: European Union
Document Date: March 7, 2019