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After years of wrangling, the EU’s 27 nations finally binned an autonomous blacklist of jurisdictions Wednesday that present an elevated threat of financial crime, or at least did in the eyes of the European Commission, the bloc’s executive branch.

The European Council, which represents the EU’s national governments, also proposed new rules for governing public-private partnerships and vetting legal entities for anti-money laundering purposes among a raft of other revisions to a broader AML plan that the European Commission unveiled last year.

Czech Finance Minister Zbynek Stanjura, whose country currently holds the rotating presidency of the council, described the bloc’s current controls against illicit finance in a statement Wednesday as “already quite strict,” before adding that “our intention is to close these loopholes further, and to apply even stricter rules in all EU member states.”

The European Commission proposed an initial blacklist of 23 jurisdictions with “strategic deficiencies” in their defenses against financial crime six years ago pursuant to the bloc’s then-operative anti-money laundering directive, 4AMLD.

But the draft quickly drew condemnation at home and abroad for including American Samoa, Guam, Puerto Rico, the U.S. Virgin Islands, Saudi Arabia and seven other jurisdictions that did not draw similar censure from the Financial Action Task Force, which also voiced concerns.

EU nations agreed Wednesday to discard their autonomous list and simply replicate FATF’s blacklist, which now includes Iran, Myanmar and North Korea, and “gray list,” which currently counts Albania, Jamaica, the United Arab Emirates, Turkey and 19 other jurisdictions as members.

The council also published several draft provisions Wednesday that would explicitly allow financial institutions and public agencies to exchange financial intelligence through “secure channels” to the extent that the EU nations involved consider “necessary and proportionate.”

Eduard Hovsepyan, an AML policy advisor at the Brussels-based European Banking Federation, said the provisions would provide more legal certainty to countries that have hesitated to allow such partnerships for fear of violating the EU’s strict data-protection rules.

“It’s a step in the right direction, and we hope the European Parliament matches this ambition,” Hovsepyan told ACAMS moneylaundering.com.

Rethinking beneficial ownership

To ensure a “consistent approach” for vetting legal entities that form part of broader, “multi-layered” structures and come with complex ownership arrangements, Wednesday’s proposals would have financial institutions identify, aggregate and log all shares owned by the same individuals, whether directly or indirectly.

Legal entities and their financial institutions should also “clearly understand” their ownership, including “all those intermediary steps between the beneficial owners and the legal entity or legal arrangement itself,” the council recommended Wednesday. “[Ownership] information should therefore always include a description of the relationship structure.”

The EU currently requires legal entities to identify any natural persons who own 25 percent or more of their shares, but the council now wants the commission to identify a new class of high-risk legal entities that should trigger disclosure requirements at an unspecified, lower percentage of ownership.

Members of the council also proposed to ensure that journalists and nonprofit organizations can continue querying national databases of ownership information after the bloc’s highest court ruled that allowing anyone to access the personal details of owners without first demonstrating a “legitimate interest” breaches data privacy and protection standards.

The council wants to give the EU’s 27 nations discretion to determine what constitutes a “legitimate interest” for accessing their databases, but warned them to avoid “overly restrictive” definitions that could, for example, block academics from conducting research.

“The set of data to be made available to the public, provided that the legitimate interest can be demonstrated, should be limited, clearly and exhaustively defined, and should be of a general nature, so as to minimize the potential prejudice to the beneficial owners,” the council advised.

Contact Koos Couvée at kcouvee@acams.org