Title: EU Identifies Democratic Republic of Congo as High-Risk Jurisdiction for Money Laundering and Terrorist Financing
Background
The European Commission (EC) has added the Democratic Republic of Congo (DRC) to its list of high-risk third countries with strategic deficiencies in their Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) frameworks. This listing was announced in a new Delegated Regulation adopted on December 12, 2023.
Consequences of the Listing
To safeguard the EU’s financial system and maintain the proper functioning of the internal market, the European Commission engages in global collaborations, including through the Financial Action Task Force (FATF), to combat the circulation of illicit funds. The commission uses FATF’s evaluations to identify nations with insufficient AML/CFT measures.
Gatekeepers, such as banks, are obliged to exercise caution when conducting business with these high-risk countries. In accordance with EU Directive 2018/843 (5th Anti-Money Laundering Directive), gatekeepers must apply increased checks and control measures for transactions involving high-risk jurisdictions.
The DRC in the EU’s High-Risk List
The DRC joins the following jurisdictions on the EU AML/CFT deficiencies list:
| High-risk third country | Date of entry into force |
|---|---|
| Afghanistan | September 2016 |
| Barbados | October 2020 |
| Burkina Faso | March 2022 |
| Democratic Republic of Congo | March 2023 |
| … | … |
| United Arab Emirates | March 2023 |
| Vietnam | October 2023 |
| Yemen | September 2016 |
EU’s Listing Process
The EU’s listing process is structured to achieve three primary goals:
- Protecting the integrity of the Union’s financial system and internal market
- Reinforcing internal security
- Promoting sustainable development
The process follows a four-stage approach:
- Pre-assessment: Countries are evaluated based on factors such as their impact on the EU financial system, IMF reviews, and economically significant ties.
- Assessment: The EU Commission examines the country’s AML/CFT framework in detail.
- Listing: The EU Commission decides whether the country poses a significant threat to the EU and, if so, adds it to the list.
- Monitoring: The EU Commission continues to monitor the country’s progress in addressing its AML/CFT deficiencies.
Methodology
To ensure transparency and fairness, the EU Commission developed a methodology to identify countries that pose significant AML/CFT threats to the EU. This methodology aims to clarify the measures based on faults in their national AML/CTF regimes endangering the Union’s financial system.
By maintaining a transparent and stringent process, the EU reinforces its commitment to combating money laundering, terrorist financing, and other financial crimes, while safeguarding its financial system and internal market.
In summary, the European Commission has identified the Democratic Republic of Congo as a high-risk jurisdiction for money laundering and terrorist financing due to strategic deficiencies in its AML/CFT framework. As a result, gatekeepers must exercise increased caution when conducting business with this country and apply stricter checks and control measures. The EU’s listing process is crucial for protecting the EU’s financial system, reinforcing internal security, and promoting sustainable development.