Having been classified as a major threat to security due to its refusal to crack down on terrorism financing and a continued lack of enthusiasm for halting massive money laundering schemes, the European Commission added Saudi Arabia to its list of nations who are considered serial offenders when it comes to financial crimes.
EU lenders will now be required to carry out more robust checks on payments involving entities from the Kingdom.
The announcement came as part of a broader crackdown by the EU on countries that are considered the worst money laundering offenders. Included, along with Saudi Arabia, on the blacklist are 23 other countries and territories – Panama, Nigeria, Libya, Botswana, Ghana, Samoa, the Bahamas, American Samoa, US Virgin Islands, Puerto Rico, Guam, Afghanistan, North Korea, Ethiopia, Iran, Iraq, Pakistan, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, and Yemen.
In addition to their weak approach towards cracking down on money laundering and terrorism financing, the blacklist includes entities who have either refused to coordinate or have insufficient cooperation with the EU on all matters of transparency about the beneficial owners of companies and trusts.
The 28 EU members now have one month to endorse the new list.
The UK has objected to Saudi Arabia being added to the list as it argues that the Commission has “confuses businesses” because it diverges from a smaller listing of only 12 entities compiled by its Financial Action Task Force.
Saudi Arabia is a major market for the UK’s largest lenders, including the Royal Bank of Scotland and HSBC, who are considered market leaders.
“Saudi Arabia’s commitment to combating money laundering and the financing of terrorism is a strategic priority and we will continue to develop and improve our regulatory and legislative frameworks to achieve this goal,” the Saudi Finance Minister Mohammed al-Jadaan said in a statement on February 14.
EU Commissioner Vera Jourova, who proposed the list, said the Commission is closely monitoring a number of other jurisdictions, including Russia, the City of London, and Azerbaijan.