Brussels is to revive a blacklist of non-EU countries which it accuses of money laundering, after a previous attempt was shot down by European capitals when it named Saudi Arabia and four overseas US territories.
Vera Jourova, the EU’s justice commissioner, told the FT that the incoming commission would by October unveil a revamped methodology to identify overseas jurisdictions which are failing to crack down on money laundering risks and terrorist financing.
Brussels’ fresh push to produce its first independent blacklist comes after 27 out of 28 EU member states blocked the publication of an initial draft in February, in an unprecedented rebuff to the commission. Governments led by the UK, Germany and France complained they had been blindsided by the initiative and said the list was not drawn up in a “transparent and credible process”.
Ms Jourova told the FT the rejection “is still not easy for me to swallow” but the commission would forge ahead with a fresh blacklist using a new methodology that has been devised in co-operation with EU capitals.
“I believe we honestly did our best to have the methodology right and to have the assessment right,” said Ms Jourova, who has been nominated by the Czech government to serve a second term as Prague’s EU commissioner from November.
“The member states were critical with the methodology for two reasons: insufficient involvement from their side in the process and insufficient communication with the territories likely to be listed,” Ms Jourova said. “We have admitted this point and said we need to communicate earlier with the states that might appear on the list. That is why we are now reviewing the methodology.”
The initial draft named 23 jurisdictions including Saudi Arabia, Guam, the US Virgin Islands, American Samoa and Puerto Rico — none of which are named on an international blacklist prepared by the Financial Action Task Force, the global authority on money laundering. Their inclusion sparked fierce lobbying of EU states’ national capitals by Riyadh and drew sharp criticism from Washington for being a politically motivated exercise.
Ms Jourova said she was convinced the commission “did right to list Saudi Arabia” but 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.
“The assessment using the new methodology will come with a new result,” she said. “A problematic aspect of [the first list] was that it was one size fits all but not all states are at comparable levels of risk. So I took all that criticism on board and now the experts are working on how to address this issue.”
Although there are no financial sanctions attached to the blacklist, European banks would have to carry out “enhanced” checks on funds from the named territories by rigorously vetting customers.
The EU has been determined to crack down on illicit cash flows into the bloc after high-profile money-laundering scandals involving Germany’s Deutsche Bank and Denmark’s Danske.
Ms Jourova said 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”.
While European capitals would rather Brussels avoided making politically sensitive judgments about the financial systems of non-EU countries, the European Parliament has pushed the commission to expand the blacklist to include Moscow. MEPs, along with member states, have the power to veto the draft list.
Sven Giegold, a Green MEP, said the new list should not “bow to the political pressure exerted by the member states”.
“Rather than shortening the list, it should be completed by countries such as Russia, Azerbaijan and the United Arab Emirates,” he said. “The EU Commission should also publish its country assessments as soon as possible in order to open an objective and fair expert discussion.”
