Exchange between Irish MEP Clare Daly and the European Commission

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EU AML/CTF blacklist

July 15, 2020 – Question for written answer E-004220/2020

The EU’s AML/CTF blacklist system has been criticised as racist¹ and as ‘a clear manifestation of Europeans’ longstanding penchant for domination, exploitation and brutality’. It has been criticised for the glaring omission of predominantly white, non-EU jurisdictions such as Gibraltar, Russia and the USA which are well known as money-laundering hotspots, and for the disproportionate inclusion of economically weak, non-white countries whose level of economic activity (including money laundering) is insignificant relative to that of EU Member States and other omitted countries.

1. Can the Commission address these criticisms and account for the fact that the EU’s AML/CTF blacklist is predominantly made up of non-white countries in the Global South?
2. Is it concerned that the penalties imposed as a consequence of blacklisting have the potential to damage irreparably the economies of blacklisted countries, particularly in light of the fact that most of the states blacklisted are economically weak to start with?

Answer given by Ms McGuinness on behalf of the European Commission

October 28, 2020

Under Directive (EU) 2015/849², the Commission is mandated to identify third-country jurisdictions presenting strategic deficiencies in their Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT) regimes (so called ‘high-risk third countries’) that pose significant threats to the EU’s financial system.

On 7 May 2020, a revised methodology for identifying high-risk third countries was published³. It lays down two main ways that could lead to a third country’s identification as a high-risk country: 1) countries publicly identified by the Financial Action Task Force (FATF); and 2) countries assessed and identified autonomously by the EU.

Any third country posing a risk to the international financial system, as identified by FATF, is presumed to pose a risk to the EU internal market. Delegated Regulation 2020/855⁴ updated the EU list of high-risk third countries to take into account the latest developments of FATF lists.

The economic relevance of a third-country jurisdiction for the EU and the systemic impact on the integrity of the EU financial system due to the level of threat are criteria to determine the scope of the EU autonomous assessment.

The Commission has made public on its website the list of countries in the scope of EU assessment⁵. The Commission intends to assess all such countries by 2025 based on clear objective criteria, which ensure equal treatment. These criteria are contained in the Methodology referred to above.

The inclusion in the EU list does not entail any sanctions: the principal consequence of the listing is that obliged entities⁶ in the Member States are bound to apply enhanced ‘know your customer’ checks to business relationships or transactions involving high-risk third countries⁷.

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1. https://medium.com/@marladukharan/jaccuse-the-european-union-s-institutionalized-racism-and-bullying-f4186d092f62 ↩︎
2. Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, OJ L 141, 5.6.2015, p. 73‐117. See in particular, Article 9. ↩︎
3. Brussels, 7.5.2020 SWD(2020) 99 final. ↩︎
4. Commission Delegated Regulation (EU) 2020/855 of 7 May 2020 amending Delegated Regulation (EU) 2016/1675, OJ L 195/1, 19.6.2020. ↩︎
5. https://ec.europa.eu/info/files/list-countries-scope-eu-assessment-high-risk-third-countries-under-directive-eu-2015-849-and-list-priority-1-countries-assessment-2018_en ↩︎
6. Obliged entities are defined in Article 2 of Directive (EU) 2015/849 (as amended by Directive(EU) 2018/843). ↩︎
7. The list can be found in Commission Delegated Regulation (EU) 2020/855 of 7 May 2020. ↩︎