European Parliament Blocks EC Money Laundering Blacklist

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By Joe Kirwin

The European Commission will be forced to draw up a new blacklist of countries that facilitate money laundering after the European Parliament overwhelmingly rejected the latest effort that failed to consider countries that enable tax evasion.

EU lawmakers voted 392-80, with 207 abstentions, to reject the list that includes 11 countries, including Afghanistan, Bosnia and Herzegovina, Iraq, North Korea, Yemen and Syria, among others. These are countries that the Paris-based Financial Action Task Force has signaled as destinations for laundering money or sources of terrorism financing.

Any country that ends up on the money laundering blacklist will face stricter controls when doing business in the EU, to ensure financial stability and general safety.

“We can not accept that the commission relies merely on an international body—the so-called Financial Action Task Force (FATF)—in drawing up a list of jurisdictions with strategic anti-money laundering and counter-terrorism financing,’' said Ana Gomes, a Portuguese parliamentarian from the Socialist and Democrat group, in a May 17 statement.

“How can we explain to our citizens that Panama for instance, which led the Panama Papers scandal, is not even on the list?” she asked.

First Rejection

After the Parliament voted overwhelmingly in 2016 against the first AMLD blacklist, drawn up by the European Commission, the EU executive body added Ethiopia and dropped Guyana.

Parliamentary opposition to the current blacklist also concerns the criteria used by the European Commission. EU lawmakers insist that the list should also include countries that facilitate tax evasion, which the Commission believes is beyond its mandate.

European Commission spokesman Christian Wigand told Bloomberg BNA in a May 17 email that the EU executive body “regrets the vote not to approve the list.”

“Not adding new high-risk countries to the list will create risks for the internal market,” Wigand said. “It will create loopholes in the fight against terrorist financing and anti-money laundering.”

New Negotiations

The commission added that it hopes that during the final negotiations of new amendments proposed in 2016 to the EU Anti-Money Laundering Directive, it should be “possible to further clarify the listing criteria and see how the assessment could be further improved.”

Currently, EU member states and the European Parliament are negotiating the final terms of new amendments to the AMLD.

A key difference between the two EU institutions concerns the threshold for identifying beneficial owners of companies. EU member states insist it should be 25 percent or more, whereas the European Parliament wants 10 percent or more. Negotiations will continue in June.

The dispute over the AMLD blacklist is different from a tax haven blacklist that EU member states are due to finalize by the end of 2017.

Currently, EU member states are “screening” 92 countries as candidates for the tax haven blacklist. The U.S. is among the 92 countries.

To contact the reporter on this story: Joe Kirwin in Brussels at correspondents@bna.com

To contact the editor responsible for this story: Penny Sukhraj in London at psukhraj@bna.com

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