How regrettable was the European Union Commission’s move to include Saudi Arabia in the list of “high risk” countries in the area of money laundering and terrorist financing. Not only because the declaration was made without a single visit by the Commission’s delegation, and not because it had not allowed the Kingdom to explain its point of view on the initiatives it had undertaken to modernize and develop its financial system, but because the FATF (Financial Action Task Force) - whose figures were relied upon in the listing - issued a report in October that concluded that the Kingdom was on track to meet the requirements that guaranteed its full membership. The report also said that the Saudi financial system has met 36 out of 40 FATF compliance standards, including those directly involving AML/CFT.
All this great progress is then ignored, which actually indicates that the way the list was prepared was not objective and too unfair.
Saudi Arabia was not the only country that was not given the opportunity to explain its position and correct its status.
The United States, whose financial system is the throne that runs the world economy, has seen four of its jurisdictions included in the proposed listing, prompting the US Treasury Department to reject the list and consider the European Commission as having failed to review its decisions sufficiently.
“The Commission provided affected jurisdictions with only a cursory basis for its determination… [It] notified affected jurisdictions that they would be included on the list only days before issuance… [and] 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,” according to a statement by the Treasury.
As a reminder, there are no tougher and stronger global financial standards than those applied by the United States.
Nevertheless, according to the State Department’s 2018 annual report on terrorism, the Kingdom was commended for its cooperation and coordination with the US on the anti-terrorism system, in particular its adoption of a new counterterrorism policy in November 2017, which was then considered a huge development in the modernization of its financial system.
Following its announcement, the proposed list was criticized by several countries within the EU itself. The EU Commission has disregarded the fact that the Kingdom has made radical changes in its AML/CFT system, to harmonize its legal and institutional frameworks with those of the FATF. It’s natural that the effectiveness of these recent measures cannot be seen immediately, as the financial system needs enough time to address its shortcomings.
While the declaration of the list is an unsuccessful step, it does not entail any kind of sanctions or restrictions on trade relations, nor does it hinder the continuation of development aid. However, it requires banks and institutions to apply prudent measures to transfers that involve these countries. This means that the actual harm caused by the injustice towards a country like Saudi Arabia is greater than the repercussions of its implementation.
The door is open for the EU commission and the AML/CFT technical teams to visit the Kingdom and take a direct view of the initiatives that have been introduced in the financial system, instead of implementing such a step without taking into account progress achieved in this area.
Weaknesses are probable and need to be corrected, but that does not happen easily when you make your decision thousands of miles away.
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