Members of the European Union's parliament have failed to endorse a blacklist of "countries deemed to be at risk of money laundering and terrorist financing" because there are not enough countries on it.

The parliament, according to the EU's press service, thought the blacklist "too limited" and wanted to have it expanded "to include territories that facilitate tax crimes." The representatives might have been thinking about the offshore jurisdictions that are the traditional targets of their governments' ire. Without their consent, the EU cannot force its constituent countries to observe the blacklist legally.

The list was meant to identify highly risky 'third' countries with strategic deficiencies as regards money laundering and terrorist finance that threaten the EU's financial system and for which "enhanced customer due diligence" [EDD] measures are necessary at "EU obliged entities" (financial firms that have to obey EU AML law) in line with the EU's fourth money laundering directive. It contained eleven countries, including Afghanistan, Iraq, Bosnia and Herzegovina, and Syria - whose financial institutions were singled out for extra screening a meeting of the Financial Action Task Force (which largely does the bidding of the US Government) in October last year. The parliamentary site does not contain any lists of first, second, third or fourth countries.

The parliament made the point that the EU is free to move beyond FATF standards, either by keeping a country on its list even if the FATF has de-listed it, or by including additional countries as long as this is in line with article 9(2) of the directive. Indeed, it said that predicate offences to money laundering, such as tax crimes, satisfy the criteria of article 9(2) and ought therefore to be taken into account.

It therefore seems possible that the EU will eventually promulgate a blacklist that resembles the surreptitious one that the UK's Financial Conduct Authority once used (and eventually publicised), which at the last count contained half the countries in the world.