The European Commission published a list of jurisdictions it identified as having strategic anti-money laundering and countering the financing of terrorism ("AML/CFT") deficiencies. The European Commission list includes 12 jurisdictions already on the Financial Action Task Force ("FATF") list of jurisdictions with strategic deficiencies, and adds 11 additional jurisdictions, including the U.S. territories of American Samoa, Guam, Puerto Rico and the U.S. Virgin Islands.

The U.S. Department of the Treasury ("Treasury") responded that it has "significant concerns about the substance of the list and the flawed process by which it was developed." Treasury rejected the inclusion of the U.S. territories on the list, stating that "[t]he commitments and actions of the United States in implementing the FATF standards extend to all U.S. territories. The same AML/CFT legal framework that applies to the continental United States also generally applies to U.S. territories."

Treasury stated that it does not expect U.S. financial institutions to take the European Commission's list into account in their AML/CFT policies and procedures.

Commentary / Christian Larson

Treasury is correct to push back against the European Commission's list. The global standard-setting body for combating money laundering and terrorist financing is the FATF, not the European Commission. And while the European Commission's methodology for listing jurisdictions is largely opaque, one thing is clear: the Commission excluded from its list all of the many countries and territories associated with EU Member States.

While many U.S. financial institutions will be largely free to ignore the European Commission list, EU entities and U.S. financial institutions with EU operations may not be so fortunate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.