European Union Rejects Proposal to Place Saudi Arabia on Money Laundering Blacklist

Representatives of the 28 member countries of the European Union on Wednesday, March 6, unanimously rejected the European Commission's proposal to add Saudi Arabia to the blacklist of countries that engage in money laundering or show insufficient capacity or will in combating money laundering. The proposal by the European Commission, which is considered the executive arm of the EU, had already provoked anger from Saudi Arabia and the United States, and European governments had also distanced themselves from it. Last month, the European Commission included Saudi Arabia, Libya, Nigeria, Panama, and several islands under U.S. jurisdiction in its new list, but its approval was contingent on a vote at the Union's interior ministers' meeting today. An EU official told AFP that these ministers would publish an official statement opposing the European Commission's proposal regarding Saudi Arabia during their Thursday meeting. According to a European diplomat, the Commission's method and approach to preparing this list were 'unclear' and may be vulnerable to legal challenges. This diplomat added that the right to action and accountability of countries placed on the blacklist should be respected, but the Commission's proposal was not flexible. France and Britain had opposed Saudi Arabia's inclusion on this list from the beginning; European sources emphasized that especially the London government was displeased with adding Saudi Arabia to this list because Riyadh is a significant buyer of goods and weapons from the EU, and several major British banks have substantial dealings with Saudi Arabia. According to AFP, placing Saudi Arabia on this blacklist could harm trade and investment between the Saudis and the EU. King Salman of Saudi Arabia wrote in protest letters to European leaders last month following his country's inclusion on the European Commission's list that this 'unexpected' action would harm trade and investment processes between Saudi Arabia and the Union. However, Vera Jourova, the EU's Commissioner, in support of the Commission's proposal, stated, 'Our welcome of trade does not mean we should be naive.' Gordon Sondland, the U.S. ambassador to the EU, strongly rejected the inclusion of U.S.-held territories such as Guam, Puerto Rico, Samoa, and the Virgin Islands in this list last Friday. The U.S. Treasury Department also condemned the mention of U.S. territories in this list last month. The European Commission has called for Panama, which has been frequently mentioned in money laundering reports over the years, to be added to the list of countries that have not made sufficient efforts to prevent terrorist financing and organized financial crimes. Iran is listed alongside countries such as Pakistan, Ethiopia, and North Korea as a high-risk country for money laundering. Although the Financial Action Task Force (FATF) has suspended Iran's presence on its blacklist and is waiting for the approval of laws related to combating money laundering and terrorist financing in Tehran, being on the blacklist of countries that do not take adequate action against financial money laundering does not lead to specific sanctions from the EU against the mentioned country. However, European banks are required to impose stricter oversight in transactions with citizens and entities related to these countries.