A diplomatic row threatens to break out about how the European Commission is planning to put the jurisdiction on a blacklist, one of 23 such countries.

The European Commission is ready to name and shame countries that are not doing enough to stem the flow of dirty money. Money laundering has become an increasingly serious issue for the European Union in recent months, as shown by a number of scandals.

Despite protests from leading bloc members France, Germany and the UK, Brussels is ready to blacklist up to 23 countries over alleged failures to tackle unlawful cash flows and potential financing of terrorism, EU officials have told the Financial Times.

Arguably one of the most controversial countries to be singled out is Saudi Arabia, because critics claim that Europe is taking a tougher line on the kingdom than is the case of regional powers.

The EU, along with other major powers such as the US, have drawn up so-called blacklists of jurisdictions deemed to be un-cooperative in the fight against dirty money. These lists can be controversial because in some instances their framers are accused of double standards or caving into geopolitical considerations. For example, according to EU officials who spoke to the newspaper, Saudi allies, including the US, have been lobbying to remove Riyadh in particular from the list. Saudi Arabian money, as well as that of other Gulf states, is often invested in financial capitals, including Europe’s.

If the EU publishes the list this week, it will put European banks on alert to carry out additional checks on how they deal with their banking counterparts in the blacklisted countries. The territories will also come under closer monitoring by the EU and will need to take reform measures to be removed from the list. The EU lacks the authority to impose economic sanctions.

In a diplomatic note seen by the paper, EU ambassadors including from the UK, Germany, France, Spain, Italy, Greece and Belgium have voiced "serious concerns" about releasing such a blacklist without more consultation on a technical process that is also highly political. The ambassadors argued that this was not just about shielding Saudi Arabia but about how these 23 territories have been chosen.

Officials told the paper that the EU intends to press ahead. “Member states had plenty of time to respond to the list but have only woken up now because of the Saudis,” said one EU official. The paper could not reach Saudi officials in Brussels for comment.

European governments will have 30 days to block or approve Saudi’s inclusion on the list - the biggest bone of contention among the largest bloc members. The paper also reported that territories such as American Samoa and the US territories in the Virgin Islands, which are also on the list, would probably also stoke controversy. 

This publication will update this report in due course when more information emerges.