Article 9(1) of Directive (EU) 2015/849 mandates the identification of high-risk third countries with significant deficiencies in their anti-money laundering/countering the financing of terrorism (AML/CFT) regimes, aiming to safeguard the EU financial system. The Commission, under Article 9(2), is empowered to designate such countries, considering strategic deficiencies and specific criteria. Delegated acts must be adopted within a month of identifying these deficiencies. Member States are obligated, per Article 18a, to enforce enhanced due diligence measures concerning transactions involving these high-risk third countries.
Commission Regulation (EU) 2016/1675, adopted on July 14, 2016, identified several high-risk third countries, subsequently amended multiple times. A revised methodology, introduced on May 7, 2020, emphasized increased collaboration with the Financial Action Task Force (FATF), enhanced engagement with third countries, and improved consultation with Member States and the European Parliament.
FATF updates its ‘Jurisdictions under Increased Monitoring’ list periodically. In February 2024, Kenya and Namibia were added, while Barbados, Gibraltar, Uganda, and the United Arab Emirates were removed. Uganda is urged to collaborate with its FATF-style regional body (ESAAMLG) to enhance its AML/CFT system, particularly regarding non-profit organizations.
Although Panama was delisted by FATF in October 2023, the EU maintained its high-risk classification due to persistent deficiencies. However, recent information suggests Panama has addressed these deficiencies.
Continuous updates to Commission Regulation (EU) 2016/1675 are essential to incorporate information from international organizations like FATF. The evolving nature of money laundering and terrorist financing necessitates swift adaptation of the legal framework to mitigate existing risks and prevent new ones.
The Commission proposes adding Kenya and Namibia to the high-risk third countries list based on FATF monitoring and commitments. Barbados, Gibraltar, Uganda, and the United Arab Emirates are recommended for removal due to remedied deficiencies. Panama is also suggested for removal following evidence of improvement in its AML/CFT framework.
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By FCCT Editorial Team
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