European Commission to Relaunch List of Countries with AML/CTF Strategic Deficiencies

On August 21, the Financial Times reported that Věra Jourová, the European Commissioner for Justice, Consumers and Gender Equality, stated that the European Commission (EC) would relaunch a list of countries with strategic deficiencies in their anti-money laundering (AML) and counter-terrorism financing (CTF) frameworks.

The EC had announced the adoption of the initial version of that AML/CTF list in February 2019.  But problems arose when the methodology that the EC used, though it reflected the criteria of the European Union’s Fifth Anti-Money Laundering Directive, resulted in the inclusion of countries such as Saudi Arabia, Guam, the United States Virgin Islands, American Samoa, and Puerto Rico.  As none of those countries, the Financial Times noted, “are named on an international blacklist prepared by the Financial Action Task Force [FATF], the global authority on money laundering,” that prompted “fierce lobbying” by Saudi Arabia and “sharp criticism” from the United States, and ultimately led to European Union Member States’ rejection of the list.  That rejection in turn led to the EC’s promise to produce a new list after close consultation with Member States.

In her interview with the Financial Times, Jourová said that she believes “we honestly did our best to have the methodology right and to have the assessment right.”  At the same time, she acknowledged that the EC had not sufficiently involved Member States in developing the list’s methodology, and had not sufficiently communicated in advance with the jurisdictions likely to be included on the list.  For those reasons, the new list would be based on a new methodology that had been developed in cooperation with Member States.

Jourová promised that the new assessment using the new methodology “will come with a different result.”  In particular, she “suggested the revamped list would likely name a different group of territories and allow some jurisdictions to be placed on a ‘grey list’ if they co-operate with European recommendations.”  Although FATF had been maintaining its blacklist for some time, Jourová maintained that “Europe should have its own list of risky territories — independently from FATF — to be ‘clear on the standards we want to see . . . to protect the European financial system’.”

Note: While Jourová appears to have sounded the right notes about the need to consult with Member States about the methodology, that new methodology has not yet been made available for public review.  Presumably the EC is taking greater care this time to vet the results of its assessment with the nations likely to be included on the list before issuing the list and the methodology.  If the EC is in fact planning to issue a “grey list” for countries that cooperate with the EC’s review, it may need more time to determine which countries to include on “grey” and “black” lists before publishing either list.

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