EU Places USVI on Money-Laundering Blacklist

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The European Union has placed the U.S. Virgin Islands, along with Puerto Rico, Guam and American Samoa, on a list of 23 high-risk jurisdictions it says are “posing significant threats” to the European Union’s financial system as a result of strategic deficiencies in their Anti-Money Laundering and Countering the Financing of Terror regimes.

The U.S. Treasury Department says the move is unwarranted and Treasury, Gov. Albert Bryan and Delegate Stacey Plaskett have all condemned the move.

According to a statement from the European Commission, as a result of the listing, banks and other entities covered by EU anti-money laundering rules will be required to apply increased checks on financial operations involving customers and financial institutions from these purportedly “high-risk” jurisdictions to identify suspicious money flows.

“We have established the strongest anti-money laundering standards in the world, but we have to make sure that dirty money from other countries does not find its way to our financial system. Dirty money is the lifeblood of organized crime and terrorism. I invite the countries listed to remedy their deficiencies swiftly. The Commission stands ready to work closely with them to address these issues in our mutual interest ” Věra Jourová, the European Commission commissioner for justice, consumers and gender equality said in the statement.

Plaskett said the blacklisting “will have severe financial impact and [be an] impediment to investment promotion in the Virgin Islands.”

“The blacklisting is highly damaging to our investment programs at a time when the territory continues to work hard, in partnership with the Administration and Congress, to recover from Hurricanes Irma and Maria,” she said.

Plaskett said she appreciated work Treasury has done to oppose the decision to analyze U.S. territories separately from the United States, and the blacklisting of U.S. territories, and she urged both the Treasury and the State Department to declare the blacklisting “as being without any reasonable basis, asking that territories not be included in such blacklist, or requesting a delay in the posting of the list while further discussions continue with the EU.”

The Bryan administration similarly opposes the move.

“Of course the administration disagrees and we are disappointed but we are continuing to work with Treasury on correcting the matter,” Government House Spokesperson Richard Motta said Thursday.

“It is not just us. It is all the territories and as territories we have to work with Treasury on this,” he added.

The U.S. Treasury Department issued a statement Wednesday questioning the substance of the list and the process by which it was put together.

“First, the Commission’s process did not include a sufficiently in-depth review necessary to conduct an assessment related to such a serious and consequential issue. Second, the Commission provided affected jurisdictions with only a cursory basis for its determination. Third, the Commission notified affected jurisdictions that they would be included on the list only days before issuance. Fourth, the Commission failed to provide affected jurisdictions with any meaningful opportunity to challenge their inclusion or otherwise address issues identified by the Commission,” Treasury officials said in the statement.

Treasury also opposed the inclusion of American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands on the list, saying the same legal framework that applies to the continental United States applies in the territories.

Efforts to contact Commission officials for clarification of the specific concerns regarding the U.S. Virgin Islands were unsuccessful as of Thursday evening. Johannes Bahrke, the commission spokesperson for banking and finance said “this is a question for E.U. member states,” and referred questions to the European Council, a different entity than the one that issued the blacklist.

The European Union placed the USVI on a different blacklist in 2018. That time it was a list of tax havens. As of November, 2018, there were five jurisdictions on that list, three of which were the U.S. territories of America, Guam and the USVI. The other two are Samoa and the nation of Trinidad and Tobago.