The objective indicator for high-risk countries in the Implementing Decree for the 2018 Money Laundering and Terrorist Financing (Prevention) Act has been withdrawn. This means that a transaction involving a country on the European Commission’s list of high-risk third countries no longer needs to be reported automatically to the Financial Intelligence Unit in cases where that was previously required. The high-risk list does continue to be relevant, however, for the subjective indicators. When assessing whether a transaction may involve money laundering or terrorism financing, account must be taken of the factors listed in Annexes II and III to the Fourth Anti-Money Laundering Directive (4AMLD). It follows from Annex III that there is a higher risk of money laundering or terrorism financing if a transaction involves a country without effective AML/CFT systems.
Besides the European Commission’s high-risk country list, there are a number of other country lists that can be taken into account by institutions that are subject to the Money Laundering and Terrorist Financing (Prevention) Act (the “Wwft”)when drawing up a risk assessment within the framework of the Wwft and filling in the subjective indicator.
One example is the European Commission’s list of non-cooperative jurisdictions for tax purposes. That list contributes to on-going efforts to prevent tax avoidance and promote good governance principles such as tax transparency, fair taxation, or international standards against tax base erosion and profit shifting. It was most recently updated on 10 October 2019. There are currently nine names on the list of non-cooperative jurisdictions: American Samoa, Belize, Fiji, Guam, Oman, Samoa, Trinidad and Tobago, the US Virgin Islands, and Vanuatu. The European Comission notes that this “taxation” list may sometimes overlap with its high-risk countries list, but that the lists have different objectives, criteria, and adoption procedures. The two lists are intended to complement one another in the sense that they provide markets with double protection against external risks.
On 7 October 2019, the Netherlands also provided a taxation list of “low-tax states 2020” for consultation purposes. That list of low-tax and/or non-cooperative states is drawn up annually by the Dutch State Secretary for Finance in order to implement measures to combat tax evasion. Low-tax states are states with no profits tax or a statutory rate of less than 9%. Non-cooperative states are those on the EU’s list of non-cooperative jurisdictions for tax purposes. It follows from the consultation document that the State Secretary intends designating the following states as low-tax states: Anguilla, the Bahamas, Bahrein, Barbados, Bermuda, the British Virgin Islands, Guernsey, the Isle of Man, Jersey, the Cayman Islands, Kuwait, Qatar, Turkmenistan, the Turks and Caicos Islands, Vanuatu, and the United Arab Emirates.
Other country lists that are useful for risk assessment include the two lists drawn up by the Financial Action Task Force ("FATF"). The FATF’s first list comprises countries that refuse to adapt their AML systems, namely North Korea and Iran. The FATF’s second list comprises those that are cooperative but still have shortcomings in their systems, such as Iceland, Mongolia, and Syria.
Finally, one can examine the list of countries on Transparency International’s annual corruption perceptions index. Countries are scored on a scale from 0 to 100, with 0 standing for “highly corrupt” and 100 for “very clean”. Denmark tops the list with a score of 88/100, while Somalia is at the bottom with 10/100. Countries with a score of less than 50/100 can be considered susceptible to corruption.