2,800 days later: the EU’s unexplained exception for Vanuatu

The European Union may be big, but it still treats Vanuatu (population 340,000, GDP $1.1 billion) as a “high-risk” threat, even though global regulatory bodies have deemed our nation compliant for the past eight years.

In the world of international financial regulation, few instruments carry more practical weight than the EU list of “high-risk third countries” for anti-money laundering and counter-terrorism financing (AML-CFT). Being on it makes banking harder, business more expensive, and investment more cautious. It is, in effect, a reputational sanction. Like all sanctions, its legitimacy depends entirely on the consistency and transparency with which it is applied.

Vanuatu has been on this watchlist ever since it was first published, on July 14, 2016. That is 3,555 days as of this writing.

For the first 735 of those days, the listing was warranted. Vanuatu had been placed the previous month on the Financial Action Task Force’s “grey list”, the international benchmark for AML-CFT compliance, after which the EU list was modeled.

During that time, new laws were enacted, and institutions got reformed. On June 29, 2018, the FATF declared Vanuatu compliant, and removed it from its grey list. The work had been done.

What happened next is what makes Vanuatu’s case extraordinary.

EU follows FATF – except when it doesn’t

The European Commission has updated its high-risk list twelve times since its inception, almost in lockstep with the FATF’s grey list. The pattern is consistent to the point of being mechanical: when the FATF adds a country, the EU adds it. When FATF removes a country, the EU removes it.

The EU’s own data shows an average delay of 310 days between a FATF delisting and a corresponding EU delisting. The table below shows a few representative cases drawn from 60 jurisdictions that appeared on both lists. Across the full dataset, the pattern holds without exception – except for Vanuatu.

During all that time, there were several opportunities to fix the mismatch, but Commission officials have been dragging their feet.

In October 2021, they cited transparency concerns over beneficial ownership of entities. Six months later, Vanuatu got a fully operational registry up and running. While they acknowledged the progress, they noted they had “already gone past the technical stage.” When pressed months later, their answer cited summer vacations.

That was four years ago.

A new development that demands a new answer

In February 2026, Vanuatu was admitted to the International Organization of Securities Commissions (IOSCO), in recognition of its solid regulatory regime and growing role as a key financial centre in the Pacific.

This happened while Vanuatu remains on the EU high-risk list.

At the same time, EU Commissioner for Financial Services Maria Luis Albuquerque has publicly acknowledged that the current misalignment between the EU and FATF lists creates “significant irritants with international partners” and risks undermining the EU’s future influence on global AML standards. The new Anti-Money Laundering Authority (AMLA) takes over blacklist responsibility from 2027, creating a natural moment to resolve long-standing anomalies.

Vanuatu is one of those anomalies. And we are naming it.

One question, plainly stated

We are presenting a documented pattern and asking one straightforward question:

By what criteria does Vanuatu remain on the EU high-risk list when it has been FATF-compliant for nearly eight years, longer than any other jurisdiction in comparable circumstances, and has just been admitted to IOSCO?

The European Commission owes both Vanuatu and the international community a transparent, specific answer. We will continue to document every development in this matter at fca.vu.

– Martin St-Hilaire, President, Financial Markets Association of Vanuatu
– James Hudson, Chairman, Financial Centre Association of Vanuatu

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