LUXEMBOURG, Oct 16: A European Union crime watchdog is recommending that sanctions be slapped on the Pacific state of Nauru unless it adopts laws to combat money laundering by the end of November, according to an EU document due to be released on Tuesday.

The EU’s Financial Action Task Force (FATF) is also recommended lifting sanctions against the Philippines while its recently-adopted laws on money laundering are scrutinised, according to the document, a copy of which was obtained by AFP.

The document, due to be released at the end of a meeting of EU finance and interior ministers later Tuesday, says the FATF has “decided EU states should implement counter-measures against Nauru unless appropriate legislative amendments (to its laws on money-laundering) are enacted by November 30”.

The watchdog recommended the suspension of counter-measures against the Philippines “pending verification” that money laundering legislation that Manila apparently brought in on September 29 “has in fact been enacted”, the document says.

This effectively means removing the Philippines from a blacklist of countries banned from doing financial transactions with EU banks.

Until now, the Philippines has had some of the world’s strictest banking secrecy laws and been considered a magnet for dirty money, including that bound for terrorist activities.

The FATF now wants to see if the new legislation will change that.

Nauru, which hosts some 400 offshore banks, also recently passed anti-money laundering legislation. But the FATF considers it has several deficiencies and does not adequately address the major money laundering problem, the document says.

The EU’s justice and interior ministers are due on Tuesday to approve a ban on EU-based banks opening branches in blacklisted states and an obligation for those banks to account for any large financial transactions with banks in blacklisted countries.

The FATF recommends that “stringent requirements” be imposed on clients (and) beneficial owners before business relationships are established with individuals or companies from these countries.

The 15 EU member states have already reached a provisional agreement to identify and sanction countries and territories who do not cooperate in fighting money laundering.

According to the document, the ministers will stress the urgency of taking strong action against the financing of terrorism (and introduce) coordinated counter-measures against (countries) that harbour, support or provide safe havens to terrorists and their means of financing.

The FATF also urges the 13 countries seeking EU membership to fully implement EU measures on the fight against terrorism, money laundering and financial crime particularly Hungary, which is also on the blacklist of non-cooperative nations.

The blacklist list now comprises the Cook Islands, Dominica, Egypt, Guatemala, Grenada, Hungary, Indonesia, Israel, Lebanon, the Marshall Islands, Myanmar, Nauru, Nigeria, Niue, the Philippines, Russia, St. Kitts and Nevis, St. Vincent and the Grenadines and Ukraine.—AFP