By February 11, 20180 CommentsReport

EU adds SL to money laundering blacklist

 

The European Parliament has confirmed that Sri Lanka, Tunisia and Trinidad and Tobago were on the European Commission’s blacklist of countries at risk for acts of money-laundering.

In a statement, the European Parliament on Wednesday said despite intense efforts by some Members of the European Parliament (MEPs), they have failed to achieve the 376-vote absolute majority needed to reject the inclusion of Tunisia, Sri Lanka, and Trinidad and Tobago in the European Commission’s list of non-EU countries considered to have strategic deficiencies in their anti-money laundering and terrorism financing regimes.

“The vote on Wednesday reflected the split in Parliament over the issue, with 357 votes in support of the motion to 283 votes against and 26 abstentions,” it said.

As part of its obligations under the EU’s Anti-Money Laundering Directive, the European Commission is periodically obliged to draw up a list of “high-risk third countries”.

European Parliament has veto power over the blacklist, which is one of the tools in the European Union’s armoury to protect its financial system against money laundering and terrorist financing.

In mid-December, in line with its custom of following the lead of the international Financial Action Task Force (FATF), the Commission has decided to include Sri Lanka, Tunisia and Trinidad and Tobago to its blacklist.

In a statement to Parliament on Monday, the Commissioner for Justice, Consumers and Gender Equality, Vera Jourová, declined some MEPs’ requests to de-list Tunisia as one of the blacklisted countries

Money laundering: Lanka falls short in EU vote; casinos, gems, real estate identified

Sri Lanka’s casinos, real estate and the gem and jewellery business have been identified as ‘high risk” areas requiring proper supervision of financial institutions by the European Commission.

This follows a vote that fell short of the threshold of 376 votes to over-turn the country being listed as a jurisdiction with strategic deficiencies in its anti-money laundering regime. This week, 357 members of the European Parliament (MEP) voted for an ‘Objection Motion’ to override the European Commission’s listing of Sri Lanka as a “high risk” country engaged in money-laundering – 19 short of the 376 mandatory threshold.

Twenty six (26) MEPs abstained from voting.Sri Lanka failed to clear its name on grounds that it had not implemented the EU’s Financial Action Task Force (FATF) recommendations made at its meeting in Buenos Aires in October last year and agreed through the International Cooperation Review Group (ICRG).

Among the time bound Action Plan is for Sri Lanka to show its record on the implementation of the United Nations Security Council resolutions on sanctions against Iran and North Korea.

The European Commission made the following statement against Sri Lanka (quoting from the FATF decision); “Sri Lanka shows deficiencies in international cooperation, in particular the provision of mutual legal assistance, in appropriate regulation and supervision of the non-financial sector, customer due diligence requirements for designated non-financial businesses and professions, weaknesses in risk-based supervision in the financial sector with low level of sanctions, shortcomings in relation to beneficial ownership of information for legal persons”.

Prior to the vote, MEP Cristian Preda asked European parliamentarians to consider Sri Lanka lightly, given the fact that a new Government in Colombo is trying to fix long-standing problems, and that the EU Parliament voting against Sri Lanka will send mixed signals so soon after the EU restored the GSP Plus facilities and lifted the ban on the import of fish products.

The EU Parliament decision, however, will not have punitive intent and not restricted to trade and not on financial transactions.
The FATF Action Plan was taken up for discussion by the Cabinet Committee for Economic Management (CCEM) chaired by Prime Minister Ranil Wickremesinghe on January 3.

Finance Ministry sources said that they too had met on the matter late last year, and added that the Government, and especially the Central Bank would need to take serious note of the EU vote. They recalled the 2012 ‘yellow card’ that was issued to Sri Lanka on illegal fishing methods. This was ignored and led to the country receiving a ‘red card’ and a total ban on fish exports to all EU countries. It had taken 20 months to lift the ban.


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