Plans for a European Union money-laundering blacklist that includes Saudi Arabia and several US territories appeared doomed after objections by all but one of the bloc’s 28 governments, three officials familiar with the matter said.
The list of jurisdictions with inadequate controls on illicit transactions and terrorism financing was proposed by the European Commission, the EU’s executive arm, and quickly criticised by the US Treasury as the result of a flawed process. European officials were meeting in Brussels on Friday to discuss a way forward.
While the current list may not survive, EU governments have said they are determined to stamp out money laundering after a series of scandals.
Several of the bloc’s biggest banks, including Danske Bank A/S, Deutsche Bank AG and Swedbank AB, have been implicated in money-laundering allegations, raising doubts about the quality of supervision and enforcement across the continent.
According to a draft statement by EU governments seen by Bloomberg, they plan to fault the commission’s proposal because the list “was not established in a transparent and credible process that actively incentivises affected countries to take decisive action while also respecting their right to be heard.”
This was the commission’s first list based on its own methodology, targeting more countries than those named by the Financial Action Task Force, a Paris-based global watchdog.
A country was added if “strategic deficiencies” in its anti-money-laundering framework were identified.
As a result, European banks doing business with clients in those jurisdictions would face greater regulatory hurdles.
As well as Saudi Arabia, the EU document includes Guam, the US Virgin Islands, American Samoa and Puerto Rico. Those territories aren’t on the FATF list.
“Saudi Arabia’s commitment to combating money laundering and the financing of terrorism is a strategic priority,” Finance Minister Mohammed Al Jadaan said in a statement on the Saudi Press Agency last month. It also reaffirmed the Kingdom's commitment to a joint global effort to combat corruption.
The rejection by EU diplomats means the commission will have to rethink its approach. Member states will call for a “listing that meets our high standards and thereby further strengthens" measures to combat laundering and terrorist financing.
A spokeswoman for the Romanian government, which holds the EU’s rotating presidency, declined to comment on the matter.
