Article 29Identification of third countries with significant strategic deficiencies in their national AML/CFT regimes

1. Third countries with significant strategic deficiencies in their national AML/CFT regimes shall be identified by the Commission and designated as ‘high-risk third countries’.

2. In order to identify third countries as referred to in paragraph 1 of this Article, the Commission is empowered to adopt delegated acts in accordance with Article 85 to supplement this Regulation, where:

(a)

significant strategic deficiencies in the legal and institutional AML/CFT framework of the third country have been identified;

(b)

significant strategic deficiencies in the effectiveness of the third country’s AML/CFT system in addressing money laundering and terrorist financing risks or in its system to assess and mitigate risks of non-implementation or evasion of UN financial sanctions relating to proliferation financing have been identified;

(c)

the significant strategic deficiencies identified under points (a) and (b) are of a persistent nature and no measures to mitigate them have been taken or are being taken.

Those delegated acts shall be adopted within 20 calendar days of the Commission ascertaining that the criteria in point (a), (b) or (c) of the first subparagraph are met.

3. For the purposes of paragraph 2, the Commission shall take into account calls for the application of enhanced due diligence measures and additional mitigating measures (‘countermeasures’) by international organisations and standard setters with competence in the field of preventing money laundering and combating terrorist financing, as well as relevant evaluations, assessments, reports or public statements drawn up by them.

4. Where a third country is identified in accordance with the criteria referred to in paragraph 2, obliged entities shall apply enhanced due diligence measures listed in Article 34(4) with respect to the business relationships or occasional transactions involving natural or legal persons from that third country.

5. The delegated act referred to in paragraph 2 shall identify among the countermeasures listed in Article 35 the specific countermeasures mitigating specific risks stemming from each high-risk third country.

6. Where a Member State identifies a specific money laundering or terrorist financing risk posed by a third country that the Commission has identified in accordance with the criteria referred to in paragraph 2 which is not addressed by the countermeasures referred to in paragraph 5, it may require obliged entities established in its territory to apply specific additional countermeasures to mitigate the specific risks stemming from that third country. The risk identified and the corresponding countermeasures shall be notified to the Commission within 5 days of the countermeasures being applied.

7. The Commission shall review the delegated acts referred to in paragraph 2 on a regular basis to ensure that the specific countermeasures identified pursuant to paragraph 5 take account of the changes in the AML/CFT framework of the third country and are proportionate and adequate to the risks.

The article continues in the official text.