The Council of the European Union has “unanimously decided to reject” the list of “high-risk third countries” – a paper that would require banks and financial institutions operating in Europe to “be more vigilant and to carry out extra checks in the context of transactions” involving these nations.
The document in question was drafted by the European Commission and was supposed to identify the nations that “have strategic deficiencies in their anti-money laundering and terrorist financing regimes,” which could thus pose “significant threats” to the bloc’s financial system.
Surprisingly, as many as four US territories - American Samoa, Guam, Puerto Rico, and the US Virgin Islands – found themselves on the list. They were put there alongside about two dozen –mostly Asian and African– nations, including those suffering from acute political and economic turmoil as well as armed conflicts, such as Syria, Yemen or Libya.
A 35-page report accompanying the draft list accused the named US territories of having, among other issues, lax tax evasion legislation and a lack of legally binding control measures, that would allow identification of the end beneficiaries of various financial transactions. “Large portion of high-risk sectors … are unregulated,” the report said, listing the four US territories among the 11 nations that have particularly grave “strategic deficiencies.”
This development infuriated Washington. The US Treasury rushed to issue a damning statement the same day the draft list was published by the European Commission. The statement accused the EU of being superficial in its assessment and complained that the European authorities had “failed” to provide the US with “any meaningful opportunity to challenge their inclusion” or to “discuss with the European Commission its basis for including the listed US territories.”
Washington then stated that it flat-out rejects the conclusions of the European Commission and “does not expect” any US financial institutions to take this document into account in their policies and procedures.
In a bizarre coincidence, weeks later, the Council of the European Union, which consists of the ministers representing all 28 EU members, justified its decision to reject the document with the arguments that seemed strikingly similar to those employed by the US Treasury.
The Council “cannot support the current proposal that was not established in a transparent and resilient process that actively incentivizes affected countries to take decisive action while also respecting their right to be heard,” its statement said. It also demanded that the European Commission draft a new list that would address these concerns, apparently implying that it should first discuss the situation with all affected parties before adding them to the list – precisely what Washington wanted.
In a separate development, the Council had also previously dismissed the Commission’s proposal to place Saudi Arabia on the ‘blacklist’, claiming that deficiencies within Riyadh’s anti-money laundering and terrorist financing regime were “not established in a transparent and credible process.”
The decision to remove Washington’s major Middle Eastern ally from the list also came after the Saudis explicitly voiced their opposition to the move, arguing that it could “create difficulties in trade and investment flows between the Kingdom and the European Union.”
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