Saudi Arabia In EU’s “Dirty Money” Blacklist

European Union
The European Union flag flies next to a stopped clock on the facade of the Parador de Turismo hotel in Ronda, southern Spain August 31, 2018. (Photo: REUTERS/Jon Nazca)

Saudi Arabia is included in the European Union's list of countries that are considered a threat to its financial system. The European Union believes that the laws and regulations of these countries have a high risk of money laundering, they are suspected of potential financing terrorism or accused of too little transparency to the European Union regulators.

The list includes Afghanistan, Iran, Libya, Iran, Syria, Yemen, and North Korea. Most of the nations on the list are either politically unstable or antagonized globally. Saudi Arabia is one of the latest countries to be included in the list after it was doubled. Panama, Nigeria, the Bahamas and the U.S. territories of American Samoa, the U.S. Virgin Islands, and Puerto Rico are also on the list.

Nations under the "Dirty Money" status are not restricted to conduct financial transactions in the nations under the European Union. However, it means that the financial institutions under the union will have to conduct more security measures in conducting financial transactions in these nations or territories.

Britain expressed its opposition in adding Saudi Arabia on the list since its financial sector of Britain has a great business with Saudi Arabia. Saudi Aramco, a Saudi national oil company, is expected to join the London Stock Exchange whenever its IPO moves forward.

Mutual funds in the European Union are also threatened if Saudi Arabia is included in the list. Tadawul, the Saudi stock exchange, was recently included in the emerging market indexes, MSCI and FTSE. The anticipated flow of money could complicate of Saudi Arabia is blacklisted.

Saudi Arabia believes that inclusion in the list came at a very difficult time. The nation is still working to attract foreign businesses in its plan to diversify its economy. Saudi Arabia and Aramco are looking forward to raising funds through bond offerings. The label will add to the burden the nation suffers in reaching the goal.

The inclusion of the nation to the list came after the comment of Nagud Sawiris, an Egyptian billionaire, who said that he would not invest in Saudi Arabia under current circumstances.

There is still hope for nations included on the list since there is still 1-2 months period for nations under the European Union to debate the endorsement of the list. If the majority of the nations will not endorse Saudi Arabia or any other nation to be included on the list, then they will be removed.

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