International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Wednesday, May 20, 2020

EU Blacklisted Countries for Money Laundering Concerns

The European Commission has today put forward a series of measures designed to further strengthen the EU's framework to fight against money laundering and terrorist financing:

  • An Action Plan for a Comprehensive EU policy on Preventing Money Laundering and Terrorist Financing
  • A refined and more transparent methodology to identify high-risk third countries
  • An updated list of high-risk third countries

To ensure inclusive discussions on the development of these policies, the Commission launched a public consultation today on the Action Plan. Authorities, stakeholders and citizens will have until 29 July to provide their feedback.

EU Blacklisted Countries for Money Laundering 

  1. The Bahamas,
  2. Barbados,
  3. Botswana,
  4. Cambodia,
  5. Ghana,
  6. Jamaica,
  7. Mauritius,
  8. Mongolia,
  9. Myanmar/Burma,
  10. Nicaragua,
  11. Panama,
  12. Uganda, and
  13. Zimbabwe

have strategic deficiencies in their AML/CFT regime, also based on the fact that these countries were identified in the FATF document “Improving Global AML/CFT Compliance: on-going process statement".

Consequently, the Commission considers that The Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar/Burma, Nicaragua, Panama and Zimbabwe meet the criteria set in article 9(2) of Directive (EU) 2015/849. These countries should be added to the list of the Delegated Regulation (EU) 2016/1675 as countries presenting strategic deficiencies in their AML/CFT regime that pose significant threats to the financial system of the Union.

It is further noted that Uganda was also identified by the FATF as having strategic deficiencies in its AML/CFT regime in February 2020. Uganda is already included in the list
of Delegated Regulation (EU) 2016/1675. Therefore, the status and current measures applied with regard to Uganda remain unchanged and the Delegated Regulation (EU) 2016/1675 does not need to be amended in this respect.

The Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar/Burma, Nicaragua, Panama, Uganda and Zimbabwe provided a written high-level political commitment to address the identified deficiencies and developed an action plan with the FATF for this purpose. The Commission welcomes these commitments and calls on these jurisdictions to complete the implementation of the action plan expeditiously and within the proposed timeframes. The implementation of the action plans will be closely monitored by the FATF. In order to take into account the level of commitment that has been demonstrated in the context of the FATF, these high-risk third countries are listed in the table in point I of the Annex to the Delegated Regulation (“High-risk third countries which have provided a written high-level political commitment to address the identified deficiencies and have developed an action plan with FATF”).

According to article 18a of Directive (EU) 2015/849, obliged entities in all Member States will be bound to apply enhanced customer due diligence measures with respect to business relationships or transactions involving countries included in Delegated Regulation (EU) 2016/1675.

Deletion from the list of Delegated Regulation (EU) 2016/1675

The Commission reviewed the strategic deficiencies of other countries listed in Delegated Regulation (EU) 2016/1675 that have been delisted by the FATF since July 2016 (BosniaHerzegovina, Guyana, Lao People’s Democratic Republic, Ethiopia, Sri Lanka and Tunisia) based on the requirements of Directive (EU) 2015/849.
The Commission's assessment concluded that, at this stage, Bosnia-Herzegovina and Guyana do not have strategic deficiencies in their AML/CFT regime considering the available
information. Those countries have recently taken a number of measures in order to reinforce their AML/CFT regimes and remedy identified strategic deficiencies and the Commission will review those countries when new information sources become available.

Similarly the Commission's analysis concluded that Tunisia no longer has strategic deficiencies in its AML/CFT regime considering the available information. Tunisia has
strengthened the effectiveness of its AML/CFT regime and addressed the strategic deficiencies identified by the FATF. These measures are sufficiently comprehensive and meet
the necessary requirements to consider that strategic deficiencies identified under article 9 of the Directive (EU) 2015/849 have been removed. The European Union has provided technical assistance to Tunisia to help the country to address the FATF Action Plan.

Furthermore, the Commission's assessment concluded that Ethiopia, Lao People’s Democratic Republic and Sri Lanka no longer have such strategic deficiencies in their AML/CFT regime considering the available information. Following the measures implemented to address the action plan agreed with the FATF, Ethiopia, Lao People’s Democratic Republic and Sri Lanka have remedied the strategic deficiencies in their AML/CFT regime and no longer present a significant AML/CFT threat to the international financial system. Taking into account their relevance under the revised methodology, the Commission considers that these jurisdictions no longer have strategic deficiencies in the AML/CFT framework and do not pose a significant threat to the financial system of the Union.

For other countries which were delisted by the FATF since the adoption of Delegated Regulation (EU) 2016/1675, the assessment by the Commission is still ongoing (i.e.,
Afghanistan, Iraq, Trinidad and Tobago and Vanuatu). Regarding Iraq and Afghanistan, available information sources did not allow the Commission to conclude, at this stage, whether they addressed their strategic deficiencies, in particular with respect to the effectiveness of their AML/CFT system and the relevant requirements of Article 9(2) of Directive (EU) 2015/849. The evolving security situation in these countries and its impact on the AML/CFT regime also require further analysis before concluding whether strategic deficiencies have been addressed. Regarding Vanuatu, available information sources (notably recent relevant information from the Global Forum) did not allow the Commission to conclude, at this stage, whether it addressed its strategic deficiencies, notably with regard to transparency of beneficial ownership. Regarding Trinidad and Tobago, available information sources did not allow the Commission to conclude, at this stage, whether it addressed its strategic deficiencies, notably with regard to transparency of beneficial ownership for legal arrangements. The Commission will make a review of the AML/CFT regime of those countries as a matter of priority and will engage with them as appropriate, based on the revised methodology.

Other third countries publicly identified by the FATF

On 21 February 2020, the FATF publicly identified Albania as having strategic deficiencies in its AML/CFT regime. Albania made a written high-level political commitment to work with the FATF and MONEYVAL to remedy the identified strategic deficiencies. Since the publication of its Mutual Evaluation Report in July 2018, Albania has made progress to improve technical compliance and effectiveness, including by enhancing relevant authorities’ understanding of terrorist financing risks in order to prosecute terrorist financing more effectively and by establishing a legal framework to implement targeted financial sanctions related to proliferation financing.

Albania will work to implement its commitments, including by: (1) conducting additional in-depth analysis to understand its money laundering and other risks sufficiently, and enhancing institutional coordination and cooperation; (2) improving the timely handling of mutual legal assistance requests; (3) establishing effective mechanisms to detect and prevent criminal infiltration of the economy, including by strengthening competent authorities’ powers to take necessary action; (4) ensuring that accurate and up-to-date basic and beneficial ownership information is available on a timely basis; (5) increasing the number and improving the sophistication of prosecutions and confiscations for money laundering, especially in cases involving foreign predicate offenses or third-party money laundering; (6) improving the implementation of targeted financial sanctions, in particular through enhanced supervisory action and targeted, proactive outreach.

As provided by the revised methodology, with respect to candidate countries, the Commission, in its assessment, may consider mitigating measures included in the accession
negotiations that address the identified strategic deficiencies. In this context, the Commission has developed further mitigating measures with Albania in order to ensure alignment with Directive (EU) 2015/849, including by setting up registers of beneficial ownership information. The implementation of these mitigating measures goes beyond the commitments
that Albania undertook with the FATF. Subject to the implementation of the commitments taken by Albania, the Commission considers that those additional mitigating measures allow addressing sufficiently the remaining deficiencies. Therefore, there is no need to adopt further measures under article 9 of Directive (EU) 2015/849 at this stage. 

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