Washington, February 13, 2019 – U.S.A – Today, the European Commission issued a list of purportedly high-risk jurisdictions “posing significant threats” to the European Union’s financial system as a result of strategic deficiencies in their Anti-Money Laundering and Countering the Financing of Terror (AML/CFT) regimes. The U.S. Department of the Treasury has significant concerns about the substance of the list and the flawed process by which it was developed.
The Financial
Action Task Force (FATF) is the global standard-setting body for combating
money laundering, terrorist financing, and proliferation financing. The
FATF, which includes the United States, the European Commission, 15 EU member
states, and 20 other jurisdictions, already develops a list of high-risk
jurisdictions with AML/CFT deficiencies as part of a careful and comprehensive
process. Because of the FATF’s work, virtually all countries around the
world are subject to a rigorous peer-review methodology that examines the legal
frameworks to counter illicit finance as well as how effectively jurisdictions
implement them. These reviews are an intensive process involving careful
review of the legal framework, extensive fact-gathering, and onsite visits in
which assessors engage in robust, iterative dialogues with assessed jurisdictions.
The European
Commission’s process for developing its list contrasts starkly with FATF’s
thorough methodology. First, 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. Second, the Commission provided
affected jurisdictions with only a cursory basis for its determination.
Third, the Commission notified affected jurisdictions that they would be
included on the list only days before issuance. Fourth, the Commission
failed to provide affected jurisdictions with any meaningful opportunity to
challenge their inclusion or otherwise address issues identified by the
Commission. As a result, the European Commission produced a list that
diverges from the FATF list without reasonable support.
Beyond our
concerns with the listing methodology, the Treasury Department rejects the
inclusion of American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands on
the list. The commitments and actions of the United States in
implementing the FATF standards extend to all U.S. territories. The same
AML/CFT legal framework that applies to the continental United States also
generally applies to U.S. territories. Moreover, the Treasury Department
was not provided any meaningful opportunity to discuss with the European
Commission its basis for including the listed U.S. territories.
The Treasury Department does not expect U.S financial institutions to take the European Commission’s list into account in their AML/CFT policies and procedures.