Editorial | European Union’s blacklisting

With last week’s important removal of Jamaica and Barbados from the European Union’s (EU’s) list of high-risk countries for money laundering and other global financial crimes, Mia Mottley’s lament over the uncertainties and delays they faced before the EU acted shouldn’t just be forgotten.

Indeed, in Jamaica’s case, the European parliament acted a year after the island’s removal from the global Financial Action Task Force’s (FATF) grey list of non-compliant countries. For Barbados, the wait was five months longer.

They had to wait while the Europeans engaged in internal manoeuvrings and middle power political chess games, seemingly unbothered by the cost their dithering imposed on the economies of the Caribbean countries. This was another reminder of the uneven concentration of power in an increasingly skewed global architecture, the relevance of Caribbean integration, and why the region, even in a difficult environment, must continue to advocate for reform, even if they have to adjust their tactics.

For, as the Barbadian prime minister, Mia Mottley, said in calling out the EU on the issue at a regional leaders’ summit in Jamaica: “Because of technical mechanism by which they remove countries, Barbados and Jamaica continue to suffer at the hands of the listing process when we have been deemed fully compliant with all the actions required of us by the Financial Action Task Force.

“It is wrong! … If the shoe was on the other foot, we would be told how to find ways to have our parliament change the manner in which we address this issue, rather than grouping all the countries in one basket, to be victims of any opposition of any country, in-spite of the progress made by our countries.”

ROBUST MECHANISMS

This newspaper takes seriously the need for robust mechanisms to prevent financial institutions for money laundering, or as conduits for the financing of terrorism. We also accept the primary role of the FATF in policing the global anti-money laundering and counter-terrorism financing regime, even though the rules are not always equally or evenly applied.

We, however, question the need of the EU to essentially duplicate FATF’s programme, leading to the kinds of entanglements that kept Jamaica and Barbados in regulatory limbo while their economies incurred higher costs for doing business with the EU. That’s because, once a country has been deemed high-risk by the EU and remains on its list, European-based financial institutions are obligated to apply “enhanced due diligence” in transactions with that economy. Which can mean more paperwork, delays, or in extreme circumstances, a suspension of banking services – all of which add up to higher costs for individuals and firms.

In the Jamaica/Barbados matter, because of the classification of the regulation governing high-risk certification, it meant that the decision by the commission to remove them from the list had to be certified by the European parliament.

However, Jamaica and Barbados were bundled with several countries and territories, including the United Arab Emirates (UAE) and the British territory Gibraltar into a single group for a regulatory ruling by members of the European parliament (MEPs). Once they were part of a single delegated regulation, which was subject to up-or-down votes by the parliament, it meant that they were at the mercy of the considerations the MEPs also brought to other countries that are part of the resolution.

MAINTAINED CONCERNS

In this matter, several MEPs maintained concerns about the UAE as a venue for money laundering and a group of rightwing Spanish MEPs objected to Gibraltar’s removal from the high-risk list and brought a series of resolutions opposing the move. Spain contests Britain’s ownership of Gibraltar.

The matter was further complicated by the sensitivities over the EU’s planned removal, under a different regulatory framework, over a handful of Russians, from a list of more than 2,400 individuals and entities against which the Europeans maintained sanction over Russia’s war with Ukraine.

The upshot was a slow, meandering movement of the matter through the parliament, after the Spanish MEPs of the Vox party raised objections to Gibraltar and other groups aired concerns over the UAE.

Except that the European Commission may argue the administrative efficiency of the approach they adopted, there are no compelling legal reasons, as far as this newspaper can discern, for the bundling of the countries for delisting. Or, it could be that the commission had strategic reasons for its approach that weren’t publicly disclosed.

As Ms Mottley observed, the Europeans need a more rational approach in exercising power, especially when the economic interests of small countries attempting to do the right things are at stake.

Fundamentally, the problem lies in a lopsided global architecture that favours the powerful. As perilous as it may seem to speak out at this time, the challenge is for small and like-minded countries to cooperate creatively to reshape the global agenda. This region already has the Caribbean Community – a foundation upon which more can be built.