Panama and the U.S. Virgin Islands will also be put alongside Iran and North Korea on a new EU roll call of 23 countries identified as posing higher risks for terrorist financing and money laundering, according to people familiar with its content. The European Commission, which drew up the list, will sign off on it on Wednesday, according to people familiar with its content who spoke on condition of anonymity.
EU banks dealing with customers from those countries will have to apply additional checks, also known as “enhanced customer due diligence.” That can mean that they have to gather more background information about individuals and verify that the conducted business is legitimate.
The move, to be announced by EU Justice Commissioner Vera Jourova, follows a string of money-laundering cases involving some of the bloc’s biggest banks, highlighting shortcomings in the EU’s framework. Danske Bank A/S has said that about $230 billion that flowed through an Estonian unit may need to be treated as suspicious.
It’s the first time the commission is drawing up such a list based on its own methodology, while an existing version largely builds on analysis by the Financial Action Task Force, a global watchdog. A country is added if “strategic deficiencies” in its anti-money laundering framework are identified, for example in relation to record keeping and the reporting of suspicious transactions.
The addition of Saudi Arabia also reflects concerns in Brussels that the kingdom poses a higher risk in relation to the financing of terrorist entities, according to an internal commission document that was seen by Bloomberg. The list will be subject to continuous monitoring and revisions, meaning that countries can be taken on or off, depending on their regulatory safeguards against illicit activities.
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