European Commission releases list of 23 countries with weak AML/CTF processes

The European Commission has adopted a new list of 23 countries with weak anti-money laundering and terrorist financing regimes.

This list is designed to protect the EU financial system and better prevent money laundering and terrorist financing risks, the EU claims.

Following the release of the new list, banks and other entities which are covered by EU AML rules will need to implement increased due diligence on financial operations which involve customers of financial institutions in these ‘high-risk third countries.’ The countries were chosen after in-depth analysis which is in line with new methodology which meets the stricter criteria of 5AMLD.

The list was completed based off of an analysis of 54 priority jurisdictions which was prepared after consultation with member states. Countries assessed met one of three criteria. One is if they have systemic impact on the integrity of the EU financial system, and another related to whether they are reviewed by the International Monetary Fund as international offshore financial centres. The final criteria was if the country has economic relevance and strong economic ties with the EU.

Once the full list of priority countries was compiled, the Commission assessed the level of existing threat, the legal framework and controls established to combat money laundering and terrorist financing, and the effective implementation of these. The group accounted for the work of the Financial Action Task Force (FATF), which is the international standard-setter in this field.

Following this, the Commission determined there were 23 countries with strategic deficiencies in their AML and CTF regimes.

This list will now be submitted to the European Parliament and Council for approval within one month. After this, the delegated regulation will be published in the official journal and begin enforcement within 20 days.

Regardless of being on the list, the EU will continue work with the 23 countries and work on helping them become delisted and improve their processes.

The Commission will follow up with progress made by listed countries, continue monitoring all those reviewed and assess additional countries – updating the list accordingly.

Věra Jourová, Commissioner for Justice, Consumers and Gender Equality said, “We have established the strongest anti-money laundering standards in the world, but we have to make sure that dirty money from other countries does not find its way to our financial system.

“Dirty money is the lifeblood of organised crime and terrorism. I invite the countries listed to remedy their deficiencies swiftly. The Commission stands ready to work closely with them to address these issues in our mutual interest. ”

The 23 jurisdictions are: Afghanistan, American Samoa, The Bahamas, Botswana, Democratic People’s Republic of Korea, Ethiopia, Ghana, Guam, Iran, Iraq, Libya, Nigeria, Pakistan, Panama, Puerto Rico, Samoa, Saudi Arabia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, US Virgin Islands, and Yemen.

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