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European Commission Adopts Regulation to Enhance Anti-Money Laundering and Combating Financing of Terrorism Efforts

The European Commission has adopted a regulation aimed at improving the effectiveness of anti-money laundering (AML) and combating financing of terrorism (CFT) regimes in several countries. The regulation updates the list of high-risk third countries with strategic deficiencies in their AML/CFT regimes, as required by Article 9 of Directive (EU) 2015/849.

Countries with Strategic Deficiencies

The Commission has identified the following countries as having strategic deficiencies in their AML/CFT regimes:

  • Democratic Republic of the Congo
  • Gibraltar
  • Mozambique
  • Tanzania
  • United Arab Emirates

These countries have failed to address concerns related to mutual legal assistance, supervision, beneficial ownership information, financial intelligence, and risk assessments.

Progress Made by Other Countries

On the other hand, the following countries have made significant progress in improving their AML/CFT regimes:

  • Nicaragua
  • Pakistan
  • Zimbabwe

The Commission has reviewed their progress and concluded that they no longer have strategic deficiencies in their regimes. These countries have established legal and regulatory frameworks to address concerns related to AML/CFT.

Amendments to Delegated Regulation

The Commission’s regulation amends Delegated Regulation (EU) 2016/1675, which supplements Directive (EU) 2015/849 by identifying high-risk third countries with strategic deficiencies. The amendments reflect the updated list of countries and remove Nicaragua, Pakistan, and Zimbabwe from the list.

Key Recommendations

The Commission has made several key recommendations to the countries with strategic deficiencies to address their AML/CFT shortcomings:

  • Improve risk-based supervision of financial institutions and designated non-financial businesses and professions (DNFBPs)
  • Enhance mutual legal assistance
  • Provide adequate resources for supervisors and authorities
  • Conduct comprehensive TF Risk Assessments and implement national CFT strategies

Conclusion

The Commission’s regulation aims to enhance the effectiveness of AML/CFT efforts in several countries. The regulation reflects the ongoing efforts of these countries to address concerns related to AML/CFT and identifies areas where further improvement is needed.

Sources:

  • European Commission Press Release
  • Delegated Regulation (EU) 2016/1675
  • Directive (EU) 2015/849