The EU Commission can adopt delegated acts in accordance with Article 64 in order to identify high-risk third countries, taking into account the factors as set out in Article 9.2.
Once a country is designated by the Commission as having strategic money laundering or terrorist financing deficiencies (by way of delegated acts under Article 9(2) of MLD4), obliged entities must apply enhanced due diligence (EDD) measures to manage and mitigate the risks arising.
Article 18a sets out a prescriptive list of EDD measures that must be applied by obliged entities in relation to business relationships or transactions involving high-risk third countries. These include:
Article 18(a)(1) obtaining additional information on, the customer and on the beneficial owner(s); on the intended nature of the business relationship; the source of funds and source of wealth of the customer and of the beneficial owner(s); the reasons for the intended or performed transactions and furthermore obtain the approval of senior management for establishing or continuing the business relationship.
Article 18a(2) requires Member States to impose on obliged entities one or more additional measures as applicable with regard to high risk third countries (not reproduced here).
Article 18a(3) additionally provides, that Member States must apply, where applicable, one or several measures with regard to high-risk third countries identified pursuant to Article 9(2). Three of the five measures are:
(a) refusing the establishment of subsidiaries or branches or representative offices of obliged entities from the country concerned, or otherwise,
(b) prohibiting obliged entities from establishing branches or representative offices in the country concerned, or otherwise,
(e) requiring credit and financial institutions to review and amend, or if necessary terminate, correspondent relationships with respondent institutions in the country concerned.