EU blacklists Nigeria for poor control on money laundering, terrorism financing

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The European Commission has blacklisted Nigeria, Saudi Arabia, Panama and other jurisdictions because of lax controls on terrorism financing and money laundering.

The newly added countries and jurisdictions bring the number of blacklisted nations to 23, with the EU saying it factors in “strategic deficiencies in their anti-money laundering and countering terrorist financing regimes.”

Other countries just added include Libya, Botswana, Ghana, Samoa, the Bahamas and the four United States territories of American Samoa, US Virgin Islands, Puerto Rico and Guam.

The other countries on the list are Afghanistan, North Korea, Ethiopia, Iran, Iraq, Pakistan, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen.

Bosnia, Guyana, Laos, Uganda and Vanuatu have been removed from the blacklist.

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The steps are reportedly being taken by the EU to crackdown on money laundering after several scandals at European banks. However, countries in the EU including Britain have expressed reservations about their economic relations with the listed countries, notably Saudi Arabia.

Despite pressure to exclude Saudi Arabia from the list, the commission decided to list the kingdom.

The listing does not only do reputational damage on affected countries, but also complicates financial relations with the EU. The bloc’s banks will have to execute tougher verifications on payments involving the countries.

The list is still subject the approval of the 28 EU member states, and it could be rejected by qualified majority.

Britain, which plans to leave the EU on March 29, noted that the list could “confuse businesses” because it diverges from a smaller listing compiled by its Financial Action Task Force, which is the benchmark against for anti-money laundering.

The FATF list includes 12 jurisdictions – all on the EU blacklist – but excludes Saudi Arabia, Panama and US territories. The FATF will update its list next week.

To get on the list, countries are considered based on weak sanctions against money laundering and terrorism financing, insufficient cooperation with the EU on the matter and lack of transparency about the beneficial owners of companies and trusts.

Five of the listed countries are already included on a separate EU blacklist of tax havens. They are Samoa, Trinidad and Tobago and the three US territories of American Samoa, Guam and US Virgin Islands.

Europe’s HSBC the region’s most successful bank in Riyadh. It booked profits of 450 million euros in 2015 in the kingdom but disclosed no turnover and has no employees there, according to public data released under EU rules.

“The UK will continue to work with the commission to ensure that the list that comes into force provides certainty to businesses and is as effective as possible at tackling illicit finance,” a British Treasury spokesman was quoted as saying.

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