European lawmakers have intensified calls for the EU to establish its own anti-money laundering blacklist, separate from the Financial Action Task Force (FATF), after a senior MEP labeled the global watchdog as ineffective against Russia. This development highlights growing tensions over FATF’s handling of Moscow amid ongoing sanctions evasion linked to the Ukraine conflict.
MEP Criticism Targets FATF’s Russia Stance
A top EU lawmaker recently declared that FATF has “proved toothless” in confronting Russia, pointing to the organization’s failure to blacklist Moscow despite evidence of systemic financial crimes. This statement emerged during recent parliamentary debates, where MEPs argued that FATF’s suspension of Russia’s membership in February 2023—without further punitive action—allows illicit finance to persist. FATF cited Russia’s arms trade with sanctioned states, cyber activities, and sanctions circumvention as violations of its principles, yet stopped short of full blacklisting during its October 2024 plenary.
MEPs contend that Russia’s deep-rooted corruption, organized crime ties to state entities, and war funding through laundering schemes necessitate stronger measures. Ukraine’s Finance Ministry has repeatedly urged FATF to add Russia to its blacklist, but opposition from some members delayed action. Critics within the European Parliament view this inaction as undermining global AML efforts, especially as Russia reportedly harbors cybercriminals and facilitates proliferation financing.
Push for EU’s Autonomous Third-Country List
Lawmakers are advocating for an independent EU blacklist to override FATF alignments, arguing it would better protect the bloc’s financial system from Russian risks. This follows prolonged clashes with the European Commission over list updates, where MEPs blocked delistings of jurisdictions like UAE, Panama, and Gibraltar accused of aiding Russia sanctions evasion. A April 2024 resolution warned these countries serve as platforms for circumventing EU measures against Moscow’s “war machine.”
The Commission’s recent additions—Algeria, Angola, Kenya, Monaco, Venezuela—still require Parliament and Council approval, amid accusations of “copy-pasting” FATF decisions without sufficient scrutiny. Commissioner Maria Luis Albuquerque defended the process, citing bilateral dialogues and on-site visits, but MEPs like Luděk Niedermayer and Birgit Sippel expressed frustration over limited parliamentary input. Divergences between EU and FATF lists have created compliance burdens, legal uncertainty, and vulnerabilities for EU operators.
FATF-Russia History: Suspension Without Blacklist
FATF suspended Russia’s membership in 2023 over its Ukraine invasion, dealings with Iran and North Korea, and illicit finance haven status. U.S. Treasury Secretary Janet Yellen praised the move but noted Russia’s defiance of international norms. Despite October 2024 deliberations on blacklisting—citing cyber threats and proliferation—Russia escaped updated lists.
Parliamentary pushes, including a 2024 call to classify Russia as high-risk for money laundering and terrorism financing, gained traction in plenary debates with Commissioner Mairead McGuinness. MEPs linked Moscow’s schemes to war funding, urging FATF-style listing. Yet, EU officials like John Berrigan later deemed adding Russia “symbolic,” citing existing sanctions.
Broader Implications for AML Compliance
Non-alignment with FATF has strained EU international ties, per Commissioner Albuquerque, risking influence over global assessments. Delays expose the bloc to money laundering via unlisted high-risk areas, complicating due diligence for banks and firms. Transparency International noted the Commission’s concession to assess Russia by year-end, but MEPs demand more.
Recent approvals of updated lists removed some contested jurisdictions, aligning closer with FATF but fueling politicization fears. As Russia faces U.S. sanctions on metals and evasion networks, EU divergence could heighten global compliance complexity. Lawmakers’ separate blacklist proposal aims to prioritize geopolitical threats like Moscow over strict FATF mimicry.
Sanctions Evasion and Geopolitical Tensions
MEPs highlight delisted countries’ roles in Russian sanctions bypass, from financial platforms to indirect trade. This undermines EU efforts post-2022 invasion, where Parliament labeled Russia a “terrorist state.” Ongoing FATF inaction prompts calls for EU autonomy in third-country risk evaluations under AML Directive Articles 9 and 64.