The EU has stigmatised Saudi Arabia and four US territories on “dirty money”, but let Azerbaijan and Russia off the hook.
Saudi Arabia and the US offshore havens of American Samoa, Guam, Puerto Rico, and the US Virgin Islands posed a “high-risk” of “money laundering and terrorist financing”, the European Commission said on Wednesday (13 February).
It also added six other jurisdictions to its register: the Bahamas, Botswana, Ghana, Libya, Panama, and Samoa.
The total number of states on the blacklist, first created in 2016, now includes 23 countries.
The additions must still be approved by EU capitals and by MEPs.
But if they get through, EU banks dealing with Saudi Arabia, for instance, will be obliged to do “enhanced due diligence” on financial transactions, the EU’s justice commissioner, Vera Jourova said on Wednesday.
“Europe cannot be a laundromat for dirty money that sponsors crime and terrorism,” she said.
“There were times when we were too naive, but those times are over,” she added.
The tougher approach came in the wake of “scandal after scandal” in the EU banking system, Jourova added.
Denmark’s biggest bank, Danske Bank, was exposed last year for having handled €200bn of suspicious money from mostly Russia, in the largest fiasco of its type in European history.
EU regulators also shut down a bank in Malta, Pilatus Bank, amid revelations of Azerbaijani money laundering in a case linked to the murder of a Maltese journalist.
Jourova’s choice of word, “laundromat”, also echoed the “Azerbaijani Laundromat” – a €2.6bn laundering scheme uncovered in EU banks in 2017.
But neither Russia nor Azerbaijan, both of which were on a previous commission shortlist of 54 high-risk countries, were named in the final proposal in what some saw as a glaring omission.
“Some of the biggest dirty-money washing machines are still missing. These include Russia, the City of London and its offshore territories, as well as Azerbaijan,” Sven Giegold, a German MEP in the Greens group who investigates financial crime, said.
Bill Browder, a British rights activist who helped expose the Danske Bank scandal, said: “It’s shocking that Russia, which is probably the number one contributor to dirty money in Europe, has been left off the list”.
“It poses serious questions about the credibility of the EU’s assessment of money laundering,” he told EUobserver on Wednesday.
The Saudi listing comes in the wake of its murder of a prominent journalist, which also prompted some EU states to ban arms sales to the oil kingdom.
The Panama one comes in the wake of revelations, in 2017, that a Panamanian law firm helped funnel billions in shady funds worldwide.
Both of them complained on Wednesday, but Jourova said they would have to share more information on the real owners of opaque financial holdings if they wanted to get off the EU register.
The US also defended its overseas financial havens.
“The US department of the treasury has significant concerns about the substance of the list and the flawed process by which it was developed,” it said.
Jourova’s register of 23 risky states had no “reasonable support”, the US added, setting the scene for both Saudi and US lobbying of EU states as EU diplomats meet to ponder the commission’s draft proposal.