The European Commission issued a landmark update to its list of “high‑risk third countries” jurisdictions that pose strategic loopholes in anti–money laundering (AML) and counter‑terrorist financing (CTF) practices. In a high-profile move, the Commission delisted several major financial hubs, most notably the United Arab Emirates (UAE) and Gibraltar, and simultaneously added a host of other jurisdictions, including Monaco, to the watchlist.
The decision triggered a storm of reactions from major headlines in the UAE and Gibraltar to critical criticism from civil society and some lawmakers in Brussels.
EU’s Change and its Importance
Removal of UAE and Gibraltar
United Arab Emirates
The UAE was removed from the EU’s high‑risk category part of the so‑called grey list, marking a landmark policy shift. This move follows a similar decision by the Financial Action Task Force (FATF), which removed the UAE from its own grey list in February 2024. The EU Commission cited the FATF’s findings that the UAE had addressed strategic deficiencies in its AML/CFT framework, and stated that the country implemented a comprehensive action plan after FATF’s January 2024 on‑site assessment.
Gibraltar
Similarly, Gibraltar which had also been grey‑listed in 2023 was delisted by the EU, aligning Brussels with FATF’s earlier decision. The Gibraltar government welcomed the development, accepting it as a technical recognition of their strengthened AML regime.
Delisting means that EU-based financial institutions can reduce enhanced‑due‑diligence protocols when engaging with these classified economies, simplifying compliance burdens and reducing friction in cross-border transactions.
New Additions: Monaco & others
At the same time, the European Commission added Botswana, Lebanon, Monaco, Angola, Algeria, Côte d’Ivoire, Kenya, Laos, Namibia, Nepal, and Venezuela to its high‑risk list, bringing the total number of flagged jurisdictions to 27.
The inclusion of Monaco, one of the smallest yet most affluent financial centres in Europe, accumulated particular attention. Though often associated with shady gold bars and luxury, Monaco’s designation highlights long-standing concerns over its regulatory oversight.
Political Scenario: Balancing Diplomacy, Security, and Accountability
The EU vs. FATF Dynamic
The EU’s approach often mirrors FATF’s, but with independent considerations. While FATF strategizes and focuses on the technical aspects of AML/CFT regimes, the EU’s list is implanted in binding legislation and subject to political scrutiny under the 4th and 5th AML Directives. The EU often “double‑checks” FATF findings, then applies enhanced due diligence measures for listed countries, sometimes going beyond FATF benchmarks.
Parliamentary Pushback
In previous attempts by the Commission to drop UAE and Gibraltar from the high‑risk list in March and April 2025, the European Parliament had blocked the move. Critics argued that both jurisdictions still garnered serious vulnerabilities, particularly in real estate, as investigative reporting revealed Dubai as a hotspot for illicit asset flows.
Ultimately, this time the Commission secured a majority. A wide-ranging pledge to reconsider Russia’s AML status, including an independent review of its own guidelines and restrictions, helped bring sufficient parliamentary support to approve the updated list.
Diplomacy in Play
These decisions did not occur in a vacuum. The UAE used its impending EU delisting to enhance trade negotiations with Brussels, while Spain pressed to keep Gibraltar under scrutiny to maintain leverage in Brexit‑related talks. The final vote reflected a delicate balancing act of delisting the UAE and Gibraltar while signaling those countries like Russia may still face scrutiny.
Underpinning the Broader Debate
This decision sits at the intersection of several ongoing trends:
Convergence or Divergence from FATF?
The EU often aligns with FATF’s grey list, but occasionally chooses to diverge, reflecting its double role as rule-maker and investor of trust. FATF assessments reflect legal frameworks; the EU’s focus may include enforcement efficacy and real-world tactics.
The Limits of One-Size Voting
Transparency International and other NGOs underscore that bundle voting obscures important nuances pegging two majorly different jurisdictions (UAE, Gibraltar) into the same decision may not reflect unique national risks.
The Rise of AMLA
The EU is establishing a formal Anti–Money Laundering Authority (AMLA). Critics suggest it should develop a transparent, evidence‑based grey list that includes sectoral risk and actual illegal flows, not just country‑wide AML legal frameworks.
The EU’s June 2025 update represents a crucial recalculation of its AML policy. While it asserts the UAE and Gibraltar’s recent reforms, it also draws a firm line through Monaco and several developing nations. The move reflects a complex amalgamation of diplomacy, geopolitical alignment, and regulatory principles. As the EU moves forward with the newly-launched AMLA, the sophistication of its AML approach and its global credibility will depend on how it balances transparency, technical rigor, and geopolitical reality. To conclude, the EU’s decision is far more than a ticking of checkboxes from the checklist, it is a significant moment for transnational finance and the evolving law of illegal flows. The final verdict will depend not simply on legal definitions, but on the hard evidence of enforcement brought by auditors, NGOs, and investigative journalists.
