The European Union is considering adding Russia to its “grey list” of countries with inadequate money laundering controls, a move that could increase financial pressure on Moscow. European Commission officials are contemplating this step, which has garnered support from a majority of members of the European Parliament. However, no final decision has been made yet.
Markus Ferber, a German MEP, highlighted the widespread backing for placing Russia on the list. The inclusion in the list would result in reputational damage and necessitate financial institutions to exercise additional due diligence when handling transactions involving entities or individuals from the listed territories, leading to increased costs.
Typically, the EU’s grey list on anti-money laundering and counterterrorism financing aligns with the list issued by the Financial Action Task Force (FATF). While Russia’s membership in FATF was suspended following its invasion of Ukraine, some countries are expected to oppose adding Russia to the FATF’s grey list.
The EU’s attempt to remove the United Arab Emirates and Gibraltar from its list faced challenges last year when MEPs rejected the proposal. Social democrat, green, and liberal MEPs objected to the exclusion of the UAE, while Spanish conservatives opposed lifting controls on Gibraltar, a British Overseas Territory.
Adding Russia to the grey list could sway MEPs to support the proposal, as they can only approve or reject it without making amendments. The issue of money laundering has also complicated trade talks between the EU and the UAE, which is currently negotiating a trade deal with the EU.
Meanwhile, Spain is keen on resolving issues with the UK over Gibraltar, as it claims sovereignty over the territory. The Spanish government aims to keep Gibraltar on the EU’s grey list to maintain leverage in negotiations. The People’s Party, Spain’s second-largest delegation in the EPP, holds significance in garnering parliamentary support for the commission’s list.
In conclusion, the decision to add Russia to the EU’s grey list could have significant implications for financial institutions and diplomatic relations. The evolving situation underscores the complexities of international efforts to combat money laundering and terrorism financing.
