Art. 31 Identification of third countries posing a specific and serious threat to the Union’s financial system | Anti-money laundering regulation (AMLR) | AML

This article establishes a residual, catch-all mechanism that sits alongside Articles 29 and 30, giving the Commission the power to identify third countries that pose a specific and serious threat to the Union's financial system in exceptional cases where the existing high-risk and compliance-weakness frameworks are insufficient.

The Commission must assess a third country against a range of criteria covering its legal and institutional AML/CFT framework, the effectiveness and enforcement powers of its competent authorities, and its cooperation with Member States.

AMLA plays an advisory role throughout, either at the Commission's request or on its own initiative.

Depending on the nature of the threat identified, the response is calibrated: significant strategic deficiencies trigger countermeasures under Article 29, while compliance weaknesses trigger enhanced due diligence measures under Article 34.

Important points:

The Commission is empowered to identify third countries posing a specific and serious threat to the Union's financial system only in exceptional cases where Articles 29 and 30 cannot adequately address the risk.
AMLA can proactively flag threats to the Commission, and the Commission must provide a justification to AMLA if it decides not to act on that opinion.
Apply enhanced due diligence measures, as set out in Article 34(4), to business relationships and occasional transactions involving persons from any third country identified under this article where the threat amounts to a compliance weakness.

1. The Commission is empowered to adopt delegated acts in accordance with Article 85 to supplement this Regulation by identifying third countries where in exceptional cases it considers it indispensable to mitigate a specific and serious threat to the Union’s financial system and the proper functioning of the internal market posed by those third countries, and which cannot be mitigated pursuant to Articles 29 and 30.
1. The Commission, when drawing up the delegated acts referred to in paragraph 1, shall take into account in particular the following criteria:
  1. the legal and institutional AML/CFT framework of the third country, in particular:
    the criminalisation of money laundering and terrorist financing;
    measures relating to customer due diligence;
    requirements relating to record-keeping;
    requirements to report suspicious transactions;
    the availability of accurate and timely information of the beneficial ownership of legal persons and arrangements to competent authorities;
  2. the powers and procedures of the third country’s competent authorities for the purposes of combating money laundering and terrorist financing including appropriately effective, proportionate and dissuasive sanctions, as well as the third country’s practice in cooperation and exchange of information with Member States’ competent authorities;
  3. the effectiveness of the third country’s AML/CFT system in addressing money laundering and terrorist financing risks.
1. For the purposes of determining the level of threat referred to in paragraph 1, the Commission may request AMLA to adopt an opinion aimed at assessing the specific impact on the integrity of the Union’s financial system due to the level of threat posed by a third country.
1. Where AMLA identifies that a third country other than those identified pursuant to Articles 29 and 30 poses a specific and serious threat to the Union’s financial system, it may address an opinion to the Commission setting out the threat it has identified and why it believes that the Commission should identify the third country pursuant to paragraph 1.
2. Where the Commission decides not to identify the third country referred to in the first subparagraph, it shall provide a justification thereof to AMLA.
1. The Commission, when drawing up the delegated acts referred to in paragraph 1, shall take into account in particular relevant evaluations, assessments or reports drawn up by international organisations and standard setters with competence in the field of preventing money laundering and combating terrorist financing.
1. Where the identified specific and serious threat from the third country concerned amounts to a significant strategic deficiency, Article 29(4) shall apply and the delegated act referred to in paragraph 1 of this Article shall identify specific countermeasures as referred to in Article 29(5).
1. Where the identified specific and serious threat from the third country concerned amounts to a compliance weakness, the delegated act referred to in paragraph 1 shall identify specific enhanced due diligence measures among those listed in Article 34(4), that obliged entities shall apply to mitigate risks related to business relationships or occasional transactions involving natural or legal persons from that third country.
1. The Commission shall review the delegated acts referred to in paragraph 1 on a regular basis to ensure that the countermeasures referred to in paragraph 6 and enhanced due diligence measures referred to in paragraph 7 take account of the changes in the AML/CFT framework of the third country and are proportionate and adequate to the risks.
1. The Commission may adopt, by means of an implementing act, the methodology for the identification of third countries pursuant to this Article. That implementing act shall set out, in particular:
  1. how the criteria referred to in paragraph 2 are assessed;
  2. the process for interaction with the third country under assessment;
  3. the process for involvement of Member States and AMLA in the identification of third countries posing a specific and serious threat to the Union’s financial system.
2. The implementing act referred to in the first subparagraph of this paragraph shall be adopted in accordance with the examination procedure referred to in Article 86(2).