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Abu Dhabi, UAETuesday 19 March 2019

EU to reject money laundering black list as official overreach

King Salman had warned Saudi-EU trade could be severely damaged

In this photo provided by the Saudi Press Agency, King Salman attends a swearing in ceremony in Riyadh, Saudi Arabia, Monday, Nov. 6, 2017. The king has sworn in new officials to take over from a powerful prince and former minister believed to be detained in a large-scale sweep that has shocked the country and upended longstanding traditions within the ruling family. (Saudi Press Agency, via AP)
In this photo provided by the Saudi Press Agency, King Salman attends a swearing in ceremony in Riyadh, Saudi Arabia, Monday, Nov. 6, 2017. The king has sworn in new officials to take over from a powerful prince and former minister believed to be detained in a large-scale sweep that has shocked the country and upended longstanding traditions within the ruling family. (Saudi Press Agency, via AP)

EU member states are set to reject a proposal by the European Commission to add Saudi Arabia and six other countries to its money laundering black list.

The commission’s plan was met with anger by the US, European countries and Saudi Arabia, with King Salman himself personally intervening.

The EU’s 28 interior ministers will unanimously say they “cannot support the current proposal” on Thursday in Brussels.

The money laundering list "was not established in a transparent and resilient process that actively incentivises affected countries to take decisive action while also respecting their right to be heard,” a draft statement seen by AFP news agency said.

King Salman had warned Saudi Arabia’s presence could “damage its reputation on the one hand and will create difficulties in trade and investment flows between the Kingdom and the European Union on the other”.

The king described the move as “surprising and unexpected" and said it could hamper "trade and investment flows between the kingdom and the European Union". Reports said Riyadh had privately threatened to pare back relations and cut contracts with EU states.

Finance minister, Mohammed Al Jadaan, said in February that "Saudi Arabia’s commitment to combating money laundering and the financing of terrorism is a strategic priority."

Saudi Arabia and the other six countries were set to join 16 others on the list, made up of countries described by the European Commission as having “strategic deficiencies” in their anti-money laundering and counter-terrorism financing frameworks.

If the list were to pass, entities covered by EU anti-money laundering rules would be required to apply increased checks on operations involving places from these so-called high-risk third countries.

Iran, Iraq, Pakistan and North Korea are already included. Washington was angered by the commission’s decision to try include the US’s territories of Guam, Puerto Rico, American Samoa and the US Virgin Islands.

The EU for the first time had used a different criteria to the globally agreed Financial Action Task Force, the global standard bearer for anti-money laundering. It is much smaller and Saudi Arabia and US territories are not included.

Updated: March 6, 2019 08:28 PM

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