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  • Compliance & Business Integrity
  • February 14, 2019

Yesterday the European Commission has adopted a new list of third countries which have strategic deficiencies in their AML/CTF regimes. Once the list has been approved by the European Parliament, institutions in the Netherlands will not only have to perform enhanced client due diligence for clients from such countries, but also that they have to report all transactions from or for the benefit of a (legal) person who is residing or established in such country! For institutions subject to the Dutch AML/CTF Act (Wwft) this means substantially more work.

Based on article 9 of the Fourth EU Anti-money laundering regulation (AML4) the European Commission (EC) is authorized to adopt a list of countries that have strategic deficiencies in their AML/CTF regimes. This new list contains more and different countries than the current list, and also contains more countries than the list of the Financial Action Task Force (FATF). Please find below the new, extended EU list.

The result of including a country on the list is that all institutions in the EU have to perform enhanced client due diligence (ECDD) if a business relation or transaction involves such country (article 18a (1) AML4). In the Netherlands this obligation is included in article 8 (1) (b) Wwft which requires institutions to perform ECDD if a client is residing or established in such country.

AML4 also offers member-states the possibility to take additional risk mitigating measures with regard to (legal) persons who perform transactions in relation to any of these countries. One of these measures regards the systematic reporting of financial transactions (article 18a (2)(b) AML4). The Netherlands has implemented this measure by including a reporting obligation for all transactions by or for the benefit of a (legal) person which is residing or established in one of the above listed countries. For all Wwft institutions such a transaction has been deemed an objective indicator in the annex of the Implementing Regulation Wwft (Uitvoeringsregeling Wwft). NB this reporting obligation does not only concern transactions from or to clients who are residing/established in such countries.

Considering the above, the list brings with it a considerable amount of extra work for institutions subject to the Wwft. In addition to this the list is not uncontested. It seems that mainly the inclusion of Saudi Arabia led to resistance from multiple member states, amongst which France, Germany and the United Kingdom. The EC has provided information on the background and formation of the list in the following documents:

The new list will be submitted for approval to the European Parliament within one month. Once approved, the list will be published, and enter into force 20 days after publication.

Do you have any questions about the new list, or more in general about AML/CTF or Wwft requirements? Don't hesitate to contact us.

The new list:

Countries also included by the FATF
(1)   The Bahamas
(2)   Botswana
(3)   Democratic People's Republic of Korea (North Korea)*
(4)   Ethiopia*
(5)   Ghana
(6)   Iran*
(7)   Pakistan*
(8)   Sri Lanka*
(9)   Syria*
(10) Trinidad and Tobago*
(11) Tunisia*
(12) Yemen*

Additional countries
(13) Afghanistan*
(14) American Samoa
(15) Guam
(16) Iraq*
(17) Libya
(18) Nigeria
(19) Panama
(20) Puerto Rico
(21) Samoa
(22) Saudi Arabia
(23) US Virgin Islands

*These countries are already included on the current list. Countries which are on the current list, but which are not included in the new list are: Bosnia and Herzegovina, Guyana, Laos, Uganda, and Vanuatu.

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