EU Adds Saudi Arabia On Blacklist For Lax Control On Money Laundering

; posted on
January 29th, 2019

The European Commission has added Saudi Arabia to an EU draft list of countries that pose a threat to the bloc because of lax controls against terrorism financing and money laundering. According to Reuters’ source, the move comes amid heightened international pressure on Saudi Arabia after the murder of Saudi journalist Jamal Khashoggi in the kingdom’s Istanbul consulate on Oct. 2, 2018.

Blacklist Status

The EU’s list currently consists of 16 countries, including Iran, Iraq, Syria, Afghanistan, Yemen and North Korea, based on criteria used by the Financial Action Task Force (FATF). FATF is a global body composed by wealthy nations meant to combat money laundering and terrorism financing. In addition to the list are the US Virgin Islands, American Samoa, Libya and Panama. Despite revelations last year of billions in criminal funds being transferred from the country through EU banks, Russia is not listed. However, according to Reuters, Russia and other 47 jurisdictions, including the United States and Switzerland are under scrutiny of the EU before the EU updating its list.

Apart from the existing 16 countries, the list has been updated recently, using new criteria developed by the EU Commission since 2017, by adding Saudi Arabia. Saudi Arabia is one of the countries added to the updated list which is still confidential, one EU source and one Saudi source told Reuters. The EU's decision to include Saudi Arabia in its blacklist needs an endorsement by the bloc's 28 member states before being formally adopted.

Lax Control on Money Laundering

Even though official clarification pertaining to the updated blacklist has not been officially released, Saudi Arabia is allegedly blacklisted as it falls under EU blacklisting criteria and fails to be FATF members.

Under EU regulation, countries are blacklisted if they have strategic deficiencies in their anti-money laundering and countering the financing of terrorism regimes that pose significant threats to the financial system of the Union. In addition, the jurisdiction could also be blacklisted if they are not transparent enough in providing the information on ownership of companies that are under scrutiny or if their rules on reporting suspicious transactions or monitoring financial customers are considered not too strict.

Last year, Saudi Arabia failed to get full membership in the Financial Action Task Force (FATF) since Riyadh was not effectively investigating and prosecuting individuals involved in larger scale money laundering activity or sequestering the proceeds of crime at home or abroad, as stated by FATF.

Sources: Reuters, Yahoo News

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