Member states reject Commission’s blacklist of money launderers

(L-R) European Council President Donald Tusk, Egyptian President Abdel Fattah al-Sisi, Saudi Arabia's King Salman, European Commission President Jean-Claude Juncker, and King of Bahrain Hamad bin Isa Al Khalifa amongst others pose for the family picture during the opening of the first LAS-EU Summit in Sharm el-Sheikh, Egypt, 24 February 2019. [Khaled Elfiqi/EPA/EFE]

EU member states rejected on Thursday (7 March) the European Commission’s blacklist of countries unwilling to cooperate in the fight against money laundering and terrorism financing, as they blamed the EU executive of not being transparent during the drafting process.

In a statement adopted unanimously by the ministers of Interior and Justice, the Council said that it cannot support the Commission’s proposal given that it 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 rejected new blacklist includes 23 countries, compared with the previous one of 16 jurisdictions. Saudi Arabia, Panama and four US territories (American Samoa, U.S. Virgin Islands, Puerto Rico and Guam) were some of the names added to the group.

The Commission also went further than the Financial Action Task Force, an inter-governmental body specialized in financial crimes, whose list contains 12 territories.

The EU executive used stricter criteria, in particular in regard to the transparency of the real owners of companies and trusts (beneficial ownership structures), in order to reflect the improvements made under the fifth anti-money laundering directive.

The Commission’s decision to include Saudi Arabia, Panamá and US territories triggered an intense lobbying campaign from the affected jurisdictions.

Saudi King Salman sent letters to all EU leaders urging them to reconsider their decision. He said Riad’s inclusion “will damage its reputation on the one hand and will create difficulties in trade and investment flows between the Kingdom and the EU on the other.”

Although a strong group of countries was against the list, commissioner Vera Jourova was confident that the Council would endorse her proposal as there wouldn’t be a qualified majority to block it.

Commission adopts stricter blacklist of money launderers

The European Commission has included Saudi Arabia and Panama in an extended ‘blacklist’ of uncooperative jurisdictions in the fight against money laundering and terrorist financing, in an effort to regain citizens’ trust in the fight against financial crimes.

But member states’ permanent representatives already agreed on rejecting the blacklist on Wednesday before their ministers’ gathering.

‘Not giving up’

“I am disappointed about that decision, but I hope I don’t look like someone who is giving up, not at all,” Jourova said.

She said she would address all the member states to try to remind them of “the many declarations we’ve made after each scandal, the Panama papers, all the terrorist attacks” to tackle money launderers and terrorist financing.

She added she would have a “thorough debate” with the national governments with the aim of improving the process.

Until the Commission drafts a new list, the existing one with 16 jurisdictions will apply.

In their statement, the member states asked for a list “that meets our high standards and thereby further strengthens anti-money laundering and the combat against terrorist financing.”

The European Parliament will debate the blacklist next Tuesday (12 March). The committees responsible for this matter (Economic and Monetary Affairs and Civil Liberties, Justice and Home Affairs) already expressed their support for the Commission’s proposal.

“The decision [to reject] is a gift for financial criminals. Money laundering is a security risk for Europe,” said Green MEP Sven Giegold.

Money launderers are taking EU to the cleaners, experts say

EU nations may boast the world’s most stringent anti-money laundering rules, but recent scandals show that criminals are good at exploiting the bloc’s Achilles’ heel: a patent lack of coordination.

Commission spokesperson Margaritis Schinas regretted the Council’s decision to oppose the black list “without any debate at the political level”.

He said the compilation was based on a “solid methodology” and member states were consulted last year. Schinas added that the “highest level of transparency” was also ensured when the list itself was drafted.

The complete list published by the EU executive included Afghanistan, American Samoa, The Bahamas, Botswana, Guam, North Korea, Ethiopia, Ghana, Iran, Iraq, Libya, Nigeria, Panama, Pakistan, Puerto Rico, Samoa, Saudi Arabia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, US Virgin Islands and Yemen.

Ministers support giving more powers to EU watchdog to fight money launderers

The Ecofin Council “broadly” supported on Tuesday (2 October) the European Commission’s proposal to transfer more powers to the European Banking Authority to investigate alleged cases of money laundering in the EU.

[Edited by Zoran Radosavljevic]

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