The European Commission has added Saudi
Arabia to an EU draft list of countries that pose a threat to the bloc
because of lax controls against terrorism financing and money
laundering, two sources told Reuters on Friday.
The move comes amid heightened international pressure on Saudi Arabia
after the murder of Saudi journalist Jamal Khashoggi in the kingdom’s
Istanbul consulate on Oct. 2.
The EU’s list currently consists of 16 countries, including Iran, Iraq,
Syria, Afghanistan, Yemen and North Korea, and is mostly based on
criteria used by the Financial Action Task Force (FATF), a global body
composed by wealthy nations meant to combat money laundering and
terrorism financing.
But the list has been updated this week, using new criteria developed by
the EU Commission since 2017. Saudi Arabia is one of the countries
added to the updated list which is still confidential, one EU source and
one Saudi source told Reuters.
Saudi authorities did not immediately respond to request for comment.
The move is a setback for Riyadh at a time when it is striving to
bolster its international reputation in order to encourage foreign
investors to participate in a huge transformation plan and improve
financial ties for its banks.
Khashoggi, a columnist for the Washington Post and a critic of Crown
Prince Mohammed bin Salman, was killed and dismembered by Saudi agents
at its Istanbul consulate on Oct 2, provoking widespread revulsion and
damaging the kingdom’s image.
Apart from reputational damages, the inclusion in the list complicates
financial relations with the EU. The bloc’s banks will have to carry out
additional checks on payments involving entities from listed
jurisdictions.
The provisional decision needs to be endorsed by the 28 EU states before being formally adopted next week.
Company Ownership
A second EU official said other countries are likely to be added to the
final list but declined to elaborate as the information is still
confidential and subject to changes.
An EU commission spokesman said he had no comment on the content of the list as it had not been finalised yet.
Countries are blacklisted if they “have strategic deficiencies in their
anti-money laundering and countering the financing of terrorism regimes
that pose significant threats to the financial system of the Union,” the
existing EU list says.
Under the new EU methodology, jurisdictions could also be blacklisted if
they do not provide sufficient information on ownership of companies or
if their rules on reporting suspicious transactions or monitoring
financial customers are considered too lax.
Saudi Arabia missed out on gaining full FATF membership in September
after it was determined to fall short in combating money laundering and
terror financing.
The government has taken steps to beef up its efforts to tackle graft
and abuse of power, but FATF said in September that Riyadh was not
effectively investigating and prosecuting individuals involved in larger
scale money laundering activity or confiscating the proceeds of crime
at home or abroad.
The EU has reviewed 47 jurisdictions, including the United States,
Russia and Switzerland, before updating its list. EU countries were not
screened.
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