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  • By Mar-Vic Cagurangann

Guam seeks removal from EC's tax haven blacklist


Guam is seeking the removal of the territory from the European Commission’s (EC) expanded list of high-risk jurisdictions “with strategic deficiencies in their anti-money laundering and counter-terrorist financing frameworks.”

From the original 17 countries and territories, the hall of shame has grown to 23, which includes other U.S. territories such as American Samoa, Puerto Rico and U.S. Virgin Islands.

Palau and Marshall Islands, which were both in the 2017 and 2018 lists, have apparently been cleared.

“It is really unclear as to why Guam and the other U.S. territories are included in this list,” Gov. Lou Leon Guerrero said. “We believe this new list is unfair and unreasonable and is not a true representation of our government’s efforts to combat money laundering. Our Guam Department of Revenue & Taxation is communicating with the U.S. Treasury and the IRS regarding this matter.”

The U.S. Department of Treasury challenged the EC’s list, saying it was developed from a “flawed process.”

“The Treasury Department rejects the inclusion of American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands on the list. The commitments and actions of the United States in implementing the FATF standards extend to all U.S. territories,” the U.S. Treasury Department said in a statement Thursday.

“The Treasury Department was not provided any meaningful opportunity to discuss with the European Commission its basis for including the listed U.S. territories.”

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Guam, Palau, RMI among EU's blacklisted tax havens

Other countries on the list are Afghanistan, The Bahamas, Botswana, Republic of Korea, Ethiopia, Ghana, Iran, Iraq, Libya, Nigeria, Pakistan, Panama, Samoa, Saudi Arabia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen.

“The aim of this list is to protect the EU financial system by better preventing money laundering and terrorist financing risks,” the commission said in a press release Feb. 13.

As a result of the listing, the commission said, 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 high-risk third countries to better identify any suspicious money flows.

“On the basis of a new methodology, which reflects the stricter criteria of the 5th anti-money laundering directive in force since July 2018, the list has been established following an in-depth analysis,” the commission said.

The U.S. Department of the Treasury, however, raised “significant concerns about the substance of the list and the flawed process by which it was developed.”

“The Financial Action Task Force (FATF) is the global standard-setting body for combating money laundering, terrorist financing, and proliferation financing. The FATF, which includes the United States, the European Commission, 15 EU member states, and 20 other jurisdictions, already develops a list of high-risk jurisdictions with AML/CFT deficiencies as part of a careful and comprehensive process,” the department said.

Based on the task force’s work, the department added, “virtually all countries around the world are subject to a rigorous peer-review methodology that examines the legal frameworks to counter illicit finance as well as how effectively jurisdictions implement them.”

The intensive process involves careful review of the legal framework, extensive fact-gathering, and onsite visits in which assessors engage in robust, iterative dialogues with assessed jurisdictions, the department said.

“The European Commission’s process for developing its list contrasts starkly with FATF’s thorough methodology,” the department said, enumerating the flaws in the commission’s process.

“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; and

“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.

These flaws, according to the Treasury Department, results in a list that “diverges from the FATF list without reasonable support.”

 
 

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