International pressure on Saudi Arabia is increasingly being deployed by lawmaking bodies in ways that could slow much-needed foreign investment, regional analysts say.
On Wednesday, the European Commission (EC) added Saudi Arabia to its list of "high-risk third countries" that have "strategic deficiencies" in their anti-money laundering and counter-terrorism financing regimes, also known as AML/CFT.
The designation may not stick; it can be reversed by the European Council or European Parliament in the one-to-two month period that the bodies have to vote on it. But the move highlights a new willingness by lawmakers to more intensely scrutinize Saudi compliance with international conventions and withdraw privileges that the kingdom has enjoyed until now.
As a result of the listing, the EC wrote in a statement, banks and other bodies operating under the EU's anti-money laundering rules "will be required to apply increased checks (due diligence)" on transactions between individuals and institutions from Saudi Arabia, as well as more than 20 other listed countries, "to better identify any suspicious money flows."
The impact of the Commission's decision really depends on its acceptance by other European lawmaking entities as well as that of the U.S. Already France and the U.K. have expressed their opposition, having significant trade ties and weapons exports to the kingdom, and may attempt to reach a middle ground with the EC.
Specific evidence for Saudi Arabia's listing has not been publicly disclosed, but the EC cites risks posed by "third country jurisdictions which have strategic deficiencies in their AML/CFT regimes that pose significant threats to the financial system of the Union."