The European Union has drawn a sharp rebuke from the US treasury over the European Commission’s recently published list of 23 jurisdictions which it says have strategic deficiencies in their anti-money laundering (AML) and counter financing of terrorism (CFT) frameworks (Trade-based Financial Crime, 22 February 2019).

The commission says the jurisdictions pose “significant threats” to the EU’s financial system, but the US treasury has significant concerns about the substance of the list and what they see as the flawed process by which it was developed.

FATF standards

The US treasury argues that the Financial Action Task Force (FATF) is the global standard-setting body for AML/CFT frameworks and it applies a rigorous peer-review methodology that examines countries’ legal frameworks to counter illicit finance as well as how effectively jurisdictions implement them.

But the European Commission’s process for developing its list contrasts starkly with FATF’s thorough methodology for several reasons according to the US treasury.

Flawed methodology

It says the commission’s process did not include a sufficiently in-depth review necessary to conduct an assessment related to such a serious and consequential issue.  Neither did it provide affected jurisdictions with any other than a cursory basis for its determination.

Affected jurisdictions were notified that they would be included on the list only days before issuance by the commission, which failed to provide affected jurisdictions with any meaningful opportunity to challenge their inclusion or otherwise address issues that led to their inclusion on the list.

Findings rejected

Beyond its concerns with the listing methodology, the US treasury says it rejects the inclusion of American Samoa, Guam, Puerto Rico and the US Virgin Islands on the list.

Moreover, the treasury says it was not provided any meaningful opportunity to discuss with the European Commission its basis for including US territories on the list.

Categories: Trade Based Financial crimes News