Art. 29 Identification of third countries with significant strategic deficiencies in their national AML/CFT regimes | Anti-money laundering regulation (AMLR) | AML

This article establishes the framework for identifying and responding to "high-risk third countries" — those jurisdictions outside the EU with significant strategic deficiencies in their AML/CFT regimes.

The Commission is empowered to designate such countries via delegated acts, drawing on assessments from international standard-setting bodies.

Once a country is designated, the article triggers concrete obligations for obliged entities and provides a mechanism for Member States to apply additional countermeasures where they identify risks not already addressed at EU level.

The article connects directly to Article 34(4), which lists the enhanced due diligence measures that obliged entities must apply, and to Article 35, which sets out the broader menu of countermeasures the Commission selects from when designating a high-risk country.

Important points:

Apply enhanced due diligence measures, as listed in Article 34(4), to all business relationships and occasional transactions involving natural or legal persons from a country designated as high-risk by the Commission.
The Commission is required to adopt the designation via delegated act within 20 calendar days of confirming that the relevant criteria are met, and must regularly review those acts to ensure countermeasures remain appropriate.
Member States may impose additional countermeasures on obliged entities in their territory where a specific risk from a designated country is not covered by the Commission's countermeasures, but must notify the Commission within 5 days of applying them.

1. Third countries with significant strategic deficiencies in their national AML/CFT regimes shall be identified by the Commission and designated as ‘high-risk third countries’.
1. In order to identify third countries as referred to in paragraph 1 of this Article, the Commission is empowered to adopt delegated acts in accordance with Article 85 to supplement this Regulation, where:
  1. significant strategic deficiencies in the legal and institutional AML/CFT framework of the third country have been identified;
  2. significant strategic deficiencies in the effectiveness of the third country’s AML/CFT system in addressing money laundering and terrorist financing risks or in its system to assess and mitigate risks of non-implementation or evasion of UN financial sanctions relating to proliferation financing have been identified;
  3. the significant strategic deficiencies identified under points (a) and (b) are of a persistent nature and no measures to mitigate them have been taken or are being taken.
2. Those delegated acts shall be adopted within 20 calendar days of the Commission ascertaining that the criteria in point (a), (b) or (c) of the first subparagraph are met.
1. For the purposes of paragraph 2, the Commission shall take into account calls for the application of enhanced due diligence measures and additional mitigating measures (‘countermeasures’) by international organisations and standard setters with competence in the field of preventing money laundering and combating terrorist financing, as well as relevant evaluations, assessments, reports or public statements drawn up by them.
1. Where a third country is identified in accordance with the criteria referred to in paragraph 2, obliged entities shall apply enhanced due diligence measures listed in Article 34(4) with respect to the business relationships or occasional transactions involving natural or legal persons from that third country.
1. The delegated act referred to in paragraph 2 shall identify among the countermeasures listed in Article 35 the specific countermeasures mitigating specific risks stemming from each high-risk third country.
1. Where a Member State identifies a specific money laundering or terrorist financing risk posed by a third country that the Commission has identified in accordance with the criteria referred to in paragraph 2 which is not addressed by the countermeasures referred to in paragraph 5, it may require obliged entities established in its territory to apply specific additional countermeasures to mitigate the specific risks stemming from that third country. The risk identified and the corresponding countermeasures shall be notified to the Commission within 5 days of the countermeasures being applied.
1. The Commission shall review the delegated acts referred to in paragraph 2 on a regular basis to ensure that the specific countermeasures identified pursuant to paragraph 5 take account of the changes in the AML/CFT framework of the third country and are proportionate and adequate to the risks.
2. Upon receiving a notification pursuant to paragraph 6, the Commission shall assess the information received to determine whether country-specific risks affect the integrity of the Union’s internal market. Where appropriate, the Commission shall review the delegated acts referred to in paragraph 2, by adding the necessary countermeasures to mitigate those additional risks. Where the Commission considers that the specific additional measures applied by a Member State under paragraph 6 are not necessary to mitigate specific risks stemming from that third country, it may decide, by means of an implementing act, that the Member State shall put an end to the specific additional countermeasure.