(1)

The Union has to ensure an effective protection of the integrity and proper functioning of its financial system and the internal market from money laundering and terrorist financing. Directive (EU) 2015/849 provides that the Commission should identify countries which present strategic deficiencies in their regimes on anti-money laundering and countering terrorist financing (‘AML/CFT’) that pose significant threats to the financial system of the Union.

(2)

Commission Delegated Regulation (EU) 2016/1675 (2) identifies high-risk third countries with strategic deficiencies. This Regulation should be reviewed where appropriate in light of the progress made by those high-risk third countries in removing the strategic deficiencies in their regime on anti-money laundering and countering terrorist financing. The Commission should take into account in its assessments new information from international organisations and standard setters, such as those issued by the Financial Action Task Force (FATF).

(3)

Considering the high level of integration of the international financial system, the close connection of market operators, the high volume of cross border transactions to/from the Union, as well as the degree of market openness, it is therefore considered that any AML/CFT threat posed to the international financial system also represents a threat to the financial system of the Union.

(4)

In line with the criteria set out in Directive (EU) 2015/849, the Commission takes into account the recent available information, in particular recent FATF Public Statements, FATF documents ‘Improving Global AML/CFT Compliance: Ongoing Process Statement’, and FATF reports of the International Cooperation Review Group in relation to the risks posed by individual third countries, in accordance with Article 9(4) of Directive (EU) 2015/849.

(5)

In October 2019, the FATF identified Mongolia as a jurisdiction having strategic AML/CFT deficiencies for which Mongolia had developed an action plan with the FATF. On this basis and in accordance with the latest relevant information, the Commission’s assessment in May 2020 concluded that Mongolia should be considered as a third-country jurisdiction which had strategic deficiencies in its AML/CFT regime that posed significant threats to the financial system of the Union, in accordance with the criteria set out in Article 9 of Directive (EU) 2015/849. It was also noted that Mongolia had provided written high-level political commitments to address the identified deficiencies and had developed an action plan with the FATF.

(6)

It is of the utmost importance that the Commission conducts a permanent monitoring of third countries and assesses developments in their legal and institutional frameworks, the powers and procedures of competent authorities, and the effectiveness of their AML/CFT regime, with a view to updating the Annex of Delegated Regulation (EU) 2016/1675.

(7)

The FATF welcomed significant progress made by Mongolia in improving its AML/CFT regime and noted that this country has established the legal and regulatory framework to meet the commitments in its action plan regarding the strategic deficiencies that the FATF had identified. This country is therefore no longer subject to the FATF’s monitoring process under its on-going global AML/CFT compliance process. This country will continue to work with the FATF-Style Regional Bodies to further improve its AML/CFT regime.

(8)

The Commission assessed the information relating to the progress in addressing strategic deficiencies of Mongolia.

(9)

The Commission’s assessment concluded that, considering the available information, Mongolia no longer has strategic deficiencies in its AML/CFT regime. Mongolia has strengthened the effectiveness of its AML/CFT regime and addressed related technical deficiencies to meet the commitments in its action plan regarding the strategic deficiencies that the FATF had identified. These measures are sufficiently comprehensive and meet the necessary requirements to consider that strategic deficiencies identified under article 9 of the Directive (EU) 2015/849 have been addressed.

(10)

Delegated Regulation (EU) 2016/1675 should therefore be amended accordingly,

(1)

In its conclusions of 16 September 2019 relating to the review of Council Common Position 2008/944/CFSP (1), the Council commits to considering a decision on end-user certificates for the export of small arms and light weapons (SALW) and their ammunition.

(2)

Common Position 2008/944/CFSP states that export licences are to be granted only on the basis of reliable prior knowledge of end-use in the country of final destination. Common Position 2008/944/CFSP also states that this generally requires a thoroughly checked end-user certificate or appropriate documentation and/or some form of official authorisation issued by the country of final destination.

(3)

A common Union-wide approach to end-user control for SALW and their ammunition will diminish the risk of diversion, create a level playing field and increase clarity for the defence industry and its clients regarding relevant requirements.

(4)

The updated User’s Guide to Council Common Position 2008/944/CFSP, endorsed by the Council on 16 September 2019, provides best practices in the area of end-user certificates.

(5)

In the EU Strategy against illicit firearms, small arms & light weapons and their ammunition, adopted on 19 November 2018, the Council commits to considering a decision on end-user certificates for SALW exports, taking account of the work of the Organization for Security and Cooperation in Europe in this regard.

(6)

Council Decision (CFSP) 2020/979 (2) supports the development of an internationally recognised system for the validation of arms and ammunition management that would allow independent validation or certification of compliance with open international standards on the safe and secure management of national SALW and ammunition stockpiles.

(7)

In accordance with the second subparagraph of Article 21(3) of the Treaty on European Union, the Union is to ensure consistency between the different areas of its external action. In this respect, the Council takes note of, inter alia, its Regulation (EC) No 428/2009 (3) and Regulations (EU) No 258/2012 (4) and (EU) 2019/125 (5) of the European Parliament and of the Council.

(8)

The Council conclusions on an EU position on combatting the illicit trade in small arms and light weapons, in light of the Third Review Conference to review the implementation of the UN Programme of Action on SALW, adopted by the Council on 28 May 2018, call for the promotion of the application of end-user certificates in the context of the control of SALW exports.

(9)

In the United Nations (UN) Programme of Action to Prevent, Combat and Eradicate the Illicit Trade in Small Arms and Light Weapons in All Its Aspects, adopted on 20 July 2001, participating States commit to put in place and implement adequate laws, regulations and administrative procedures to ensure effective control over the export and transit of SALW, including the use of authenticated end-user certificates and effective legal and enforcement measures.

(10)

The Arms Trade Treaty, adopted by the UN General Assembly on 2 April 2013, states that the exporting State Party is to seek to prevent the diversion of the transfer of conventional arms by, where appropriate, examining parties involved in the export, requiring additional documentation, certificates, assurances, not authorising the export or other appropriate measures.

(11)

The UN 2030 Agenda for Sustainable Development affirms that combating the illicit trade in SALW is necessary for the achievement of many sustainable development goals, including those relating to peace, justice and strong institutions, poverty reduction, economic growth, health, gender equality and safe cities. Therefore, in Sustainable Development Goal 16.4 of that Agenda, all UN States have committed to significantly reducing illicit financial and arms flows.

(12)

In the UN Agenda for Disarmament entitled ‘Securing our Common Future’, presented on 24 May 2018, the UN Secretary-General called for the excessive accumulation of, and the illicit trade in, conventional arms to be addressed.

(13)

Unauthorised re-export remains a source of diversion of SALW and their ammunition into the illicit market.

(14)

End-user certificates are an important element in establishing effective end-user controls and minimising the risk of undesirable diversion of SALW and their ammunition. However, such certificates are not a substitute for a pre-ante full assessment of risk, made on a case-by-case basis when deciding whether or not to grant an export licence,

(1)

‘end-user’ means the final consignee and owner of the exported goods known at the time of the export licence application, according to the contractual terms of the transaction;

(2)

‘export’ means any departure of goods from the customs territory of the Union, including the departure of goods that require a customs declaration and the departure of goods after their storage in a free zone within the meaning of Regulation (EU) No 952/2013 of the European Parliament and of the Council (6);

(3)

‘exporter’ means any natural or legal person or partnership resident or established in the Union that submits an export licence application or on whose behalf such an application is submitted, namely the person or partnership that, at the time the application is accepted, holds the contract with the consignee in the relevant third country and has the necessary power to determine the sending of the goods out of the customs territory of the Union. If no such contract has been concluded or if the holder of that contract does not act on its own behalf, ‘exporter’ means the person, entity or body who has the necessary power to determine the sending of the goods out of the customs territory of the Union. Where the benefit of a right to dispose of the goods belongs to a person, entity or body resident or established outside the Union pursuant to that contract, ‘exporter’ means the contracting party resident or established in the Union.

(a)

a commitment by the end-user to notify the exporting Member State in case of loss or theft of the goods covered by the end-user certificate;

(b)

a commitment by the end-user to confirm reception of the goods covered by the end-user certificate, including their exact quantity;

(c)

a commitment by the end-user to allow post-shipment on-site verification of the exported goods by representatives of the exporting Member State, including details of arrangements for the verification visits;

(d)

assurances by the end-user that demonstrate its capacity for safe and secure weapons and ammunition management, including its capacity for safe and secure management of the stockpiles where the goods will be stored;

(e)

a commitment by the end-user on decommissioning of surplus military equipment, including: