Investors to face new restrictions as EU steps up anti-money laundering efforts

On 12 March 2019, the European Commission published an extended List of non-cooperative countries and territories (the "List").

In addition to the five jurisdictions that were already listed (American Samoa, Guam, Samoa, Trinidad and Tobago, and the US Virgin Islands), the List now also includes Aruba, Barbados, Belize, Bermuda, Dominica, Fiji, Marshall Islands, Oman, United Arab Emirates, and Vanuatu.

Some countries, which were on the List but were removed from it for some time to implement the commitments they made to improve their tax laws, have been blacklisted again for not having followed up: Barbados, Unites Arab Emirates and Marshall Islands.

A number of measures have been implemented at EU level, causing quite serious problems for the listed countries and their residents and counterparties. First, it is expressly prohibited to receive EU funding through entities in the above countries. Second, direct restrictions have been imposed with a reference to the EU list in the EU legislation. For instance, under the new EU requirements for intermediaries, tax schemes involving relevant countries will be automatically reported to tax authorities. Stricter reporting requirements have been introduced for corporations with activities in the listed countries.

In addition to the abovementioned EU requirements, Member States apply certain restrictive measures (sanctions) at national level to such jurisdictions. These include increased monitoring and audits, withholding taxes, special documentation requirements, etc.

Private investors who carry out financial transactions using foreign accounts should take into account the said restrictions and review their existing transaction models in connection with the extended List.   

For more details, please contact Partner of Private Clients Practice Oleksandr Onufrienko and Senior Associate Mykola Melnychuk.

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