The European Commission says Nigeria was named in the expanded 23 ‘dirty money’ blacklist released last Wednesday for failing to take steps to strengthen its anti-money laundering and terrorist financing regimes.
On February 13, the Commission named Panama, Nigeria and Saudi Arabia as fresh additions to the list of countries that have not done enough to address the high risk of money laundering and terrorist financing.
The EU Commissioner for Justice, Consumers and Gender Equality, Věra Jourová, said the list is an update of third world countries the EU identified earlier as jurisdictions where money laundering and terrorism financing are allowed to flourish.
The new categorization, PREMIUM TIMES learnt, is perhaps, a direct response to the assessment of the impact of the International Consortium of Investigative Journalists’ Panama Papers investigation.
The global investigations, which spanned over a year, were conducted by over 100 media organizations across the world, including PREMIUM TIMES.
The investigations, which covered financial transactions of various offshore entities, exposed hundreds of companies linked to more than 140 politicians, businessmen and world leaders in more than 50 countries.
The New Blacklist
The 23 countries include 12 listed by the Financial Action Task Force and 11 additional jurisdictions.
Some of these countries were already among 16 on the current EU list issued since July 2018.
Six African countries are on the new list, namely Libya, Tunisia, Ethiopia, Botswana, Ghana, and Nigeria.
Also on the list are five Middle East countries, including Iran, Iraq, Syria, Yemen and Saudi Arabia.
Others from the far-East region, including Afghanistan, Pakistan, Sri Lanka and the Democratic People’s Republic of Korea, Puerto Rico, Samoa, American Samoa, Guam, Trinidad and Tobago, the U.S. Virgin Islands and the Bahamas joining Panama on the list in the Caribbean Sea or South Pacific regions.
In 2018, Chairman of the Africa Union high-level panel on Illicit Financial Flows (IFFs) and former South African President, Thabo Mbeki, said Africa’s annual loss through IFFs increased from $50 billion in 2015 to over $80 billion.
The chairman of Nigeria’s Federal Inland Revenue Service (FIRS), Tunde Fowler, said at least 40 per cent of the total IFFs in Africa, come from Nigeria.
Why The New List?
The Commission said the new list followed a review of the process of these third world countries with strategic deficiencies in their anti-money laundering and counter-terrorist financing frameworks.
The decision, the Commission said, was to protect the EU financial system by better preventing money laundering and terrorist financing risks.
Under the new arrangement, the Commission said banks and other financial entities covered by EU anti-money laundering rules would be required to apply increased due diligence on financial operations involving customers and financial institutions from the affected countries.
Mr Jourová said although the Commission has established the strongest anti-money laundering standards in the world, it is resolved to ensure dirty money from other countries did not find its way to its financial system.
“Dirty money is the lifeblood of organized crime and terrorism,” the Commission said.
He urged Nigeria and other countries included in the new list to take steps to remedy their deficiencies swiftly, assuring the Commission was ready to help them address these issues in their mutual interest.
Arriving at the List
Before arriving at the new categorisation, the Commission said assessments were conducted on the level of existing threats, the legal framework, and controls to prevent money laundering and terrorist financing risks and their effective implementation.
The Commission said it also took into consideration the work of the Financial Action Task Force (FATF), the international standard-setter, in this field.
The list is expected to be submitted to the European Parliament and Council for approval within the next month.
Following the coming into force of the Fourth Anti-Money Laundering Directive in 2015, the Commission published a first EU list of high-risk third countries based on the assessment of the Financial Action Task Force.
The Fifth Anti-Money Laundering Directive broadened the criteria for the identification of high-risk third countries, including notably the availability of information on the beneficial owners of companies and legal arrangements.
The regulation will help better address risks associated with activities of shell companies and opaque structures used by criminals and terrorists to hide the real beneficiaries of transactions, including for tax evasion purposes.