Next month, the European Union will revamp its methodology for compiling its anti-money laundering blacklist, after a previous list was blocked by EU governments that objected to the listing of Saudi Arabia and four US overseas territories,
EU Commissioner for Justice Vera Jourova told the Financial Times recently.
“We have admitted this point and said we need to communicate earlier with the states that might appear on the list,” Ms. Jourova said. “That is why we are now reviewing the methodology.”
The Virgin Islands escaped the list, which was released in February, but Ms. Jourova said the new methodology is likely to yield different results, and may
include a “grey list” of countries that agree to make the EU-recommended changes.
The February blacklist included 23 non-EU countries and territories — including the United States VI, Puerto Rico, American Samoa, Guam, Saudi Arabia, Panama and Nigeria — which, according to the com- mission, had “strategic deficiencies” in their anti-money laundering regimes.
However, thanks to heavy lobbying from Saudi Arabia and the US, EU governments rejected the list, criticising the way countries were selected and the short notice they were given to respond to the findings.
The list is different from the one released in March listing “non-cooperative tax jurisdictions.” This territory avoided inclusion on that list by rushing through the Economic Substance Act late last year.
However, this territory was included on the initial anti-money laundering shortlist of 54 “priority jurisdictions” the EU Commission first identified in November 2018, based on economic ties with the EU, potential impact on the EU financial system, and whether they were identified as offshore financial centres by the International Monetary Fund.
After compiling the initial list, the commission analysed the existing threats, the legal framework, and any controls put in place by the jurisdictions to prevent money laundering and terrorist financing risks. According to the commission, it also considered the work of the Financial Action Task Force, which has compiled its own anti-money laundering blacklist. Ultimately, the EU added 11 countries to that list.
This time around, according to Ms. Jourova, the new methodology has been developed with involvement from EU governments, who claimed they had previously not been sufficiently involved, and with more communication with the countries likely to be listed.
Countries blacklisted by the EU would suffer severe consequences as banks in the EU would have to apply enhanced due-diligence measures concerning all transactions involving individuals and entities from those countries.