EU States Reject Dirty-Money List Targeting Saudis, Puerto Rico

(Bloomberg) -- European Union governments unanimously rejected a list of foreign jurisdictions posing higher risks of money laundering, criticizing officials in Brussels for drawing up the document in a flawed manner.

The list was presented last month by the European Commission, the EU’s executive arm, as a measure to protect the financial system from dirty-money risks stemming from outside the bloc. It ranked Saudi Arabia alongside Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa and Panama as jurisdictions posing increased risks of illicit finance. EU banks would have to apply tougher checks on transactions involving these regions.

EU member states “cannot support the current proposal that was not established in a transparent and resilient process,” according to a statement from the Council of the EU, which represents national governments. They called for a list “that meets our high standards and thereby further strengthens anti-money laundering and the combat against terrorist financing.”

According to diplomats involved in the process, the rejection also reflects concerns that member states weren’t properly consulted during the process, and that the document could have been challenged too easily by some of the 23 targeted jurisdictions.

Quickly Criticized

The U.S. Treasury also quickly criticized the list, saying it didn’t get enough time to respond, nor “any meaningful opportunity” to challenge the document. Vera Jourova, the EU commissioner in charge of the proposal, on Thursday denied these allegations, saying the EU executive “engaged with the third countries concerned” as well as with experts from the bloc’s member countries.

The back-and-forth over the measure comes as European banks are being rocked by revelations that they played a part in shoveling dubious funds from the former Soviet Union to the West. The EU governments said they are “strongly committed to the fight against money laundering and terrorist financing,” adding that “further progress is needed in our joint fight.”

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