EIB Group NCJ Policy – Frequently Asked Questions (FAQs)

The EIB Group is committed to continue:

(i)    maintaining stringent policies and procedures against tax fraud, tax evasion, tax avoidance as well as money laundering and terrorism financing; and

(ii)   supporting policy and regulatory developments in the area of tax good governance promoted by, inter alia, the EU, the Organisation for Economic Cooperation and Development (“OECD”) and the Global Forum on Transparency and Exchange of Information (“Global Forum”).

The EIB Group NCJ Policy outlines standards of a due diligence process towards operations with links to weakly regulated, non-transparent and non-cooperative jurisdictions, as well as presents a general approach of the EIB Group towards tax good governance. It also reiterates the EIB Group’s expectations vis-à-vis its Contracting Counterparties to disclose relevant tax good governance information in the course of the tax integrity due diligence process and throughout a business relationship if needed.

Non-Compliant Jurisdictions (“NCJs”) are designated on the basis of relevant classifications made by one or more Lead Organisations with respect to jurisdictions which have not made sufficient progress towards satisfactory implementation of EU and/or internationally agreed standards in connection with AML-CFT and/or tax transparency/tax good governance.

There are two types of NCJs:

1. “Restricted Jurisdictions” – jurisdictions classified by one or more Lead Organisations as “non-compliant”, “partially compliant”, “non-cooperative” or having an equivalent poor rating in connection with the above mentioned international and/ or EU standards; and
2. “Prohibited Jurisdictions” – jurisdictions:

(i) classified by one or more Lead Organisations as presenting ongoing and substantial AML-CFT risks, having repeatedly failed to address and/ or remedy (as the case may be) identified strategic deficiencies in its AML-CFT framework and for which call for action on members of the classifying Lead Organisation applies; or

(ii) which are Restricted Jurisdictions for both AML-CFT and tax purposes.

Lead Organisations are organisations and standard setting bodies, including the EU, the United Nations, the International Monetary Fund, the Financial Stability Board, the Financial Action Task Force, the OECD, the Global Forum, the G20, the Inclusive Framework on BEPS and any successor organisation.

The Lead Organisations publish Reference Lists, i.e. ratings and/or lists assessing the level of adherence and/or implementation of internationally and/ or EU agreed standards in the field of AML-CFT and tax good governance. The Reference Lists help to determine higher risk jurisdictions in operations to be financed/supported by the EIB Group, in particular in connection with: (i) criminal activities such as money laundering, financing of terrorism, tax crimes and (ii) tax avoidance practices (“Targeted Activities”).

As of today, the EIB Group NCJ Policy relies on the following AML-CFT and tax Reference Lists published by the Lead Organisations (and as amended and/ or supplemented from time to time): ^[1]

(i) EU Annex I List of Jurisdictions;
(ii) jurisdictions listed as "partially compliant" or "non-compliant", including corresponding provisional ratings, by the OECD and its Global Forum on Transparency and Exchange of Information for Tax Purposes against the international standard on exchange of information upon request;
(iii) jurisdictions on OECD/G20 list of jurisdictions that have not satisfactorily implemented the tax transparency standards (see p. 10 of the OECD Report to G20 of July 2022);
(iv) jurisdictions listed in the Annex of the Commission Delegated Regulation (EU) 2016/1675 of 14 July 2016 supplementing Directive (EU) 2015/849 of the European Parliament and of the Council by identifying high-risk third countries with strategic deficiencies in their AML-CFT regimes, as amended by the Commission Delegated Regulations (EU) 2020/855 of 7 May 2020 and (EU) 2021/37 of 7 December 2020.
(v) jurisdictions included in the Financial Action Task Force “High risk Jurisdictions subject to a Call for Action” (i.e. high-risk jurisdictions that have significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation. For all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system from the ongoing money laundering, terrorist financing, and proliferation financing risks emanating from the country. This list is often externally referred to as the “black list”). (https://www.fatf-gafi.org/content/fatf-gafi/en/publications/High-risk-and-other-monitored-jurisdictions/Call-for-action-february-2024.html and https://www.fatf-gafi.org/en/countries/black-and-grey-lists.html);
(vi) included in the Financial Action Task Force statement “Jurisdictions under Increased Monitoring” (i.e. countries or jurisdictions that have committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and are subject to increased monitoring. This list is often externally referred to as the “grey list”).

[1] The EIB Group shall not be liable for taking or not taking any action pursuant to or in connection with the maintenance/monitoring/update of such lists. Also, the EIB Group shall not be responsible for any damages, costs or losses whatsoever arising as a result of any change in those lists.

The EIB Group strives to enter into business relationships with Contracting Counterparties that are compliant with applicable laws, including in the area of AML-CFT and taxation, as well as best market standards.

As a rule, readiness to disclose relevant tax good governance information in the course of the tax integrity due diligence process is expected. Other expectations are exemplified in Appendix 1 to the EIB Group NCJ Policy and include amongst others:

(i) holding and providing adequate, accurate and current beneficial ownership information;

(ii) refraining from cross-border ownership structures which are primarily motivated by tax reasons and do not have economic substance;

(iii) endorsing the arm’s length principle for transactions with related parties.

Contracting Counterparties being financial intermediaries are expected to apply, on a risk-sensitive basis, principles referred to in the EIB Group NCJ Policy when extending EIB Group funding/support to final beneficiaries.

As indicated in the EIB Group tax good governance statement, the mission of the EIB Group is to contribute to policy objectives of the EU, outlined in its statutes and decisions of the European Council, by financing sound investments. EIB Group's activities encompass a series of mandates assigned by the EU with a view of supporting the EU's policies.

The EIB Group NCJ Policy foresees a general prohibition to enter into New or Renewed Operations with Contracting Counterparties incorporated/established in NCJs. Exceptions are possible in limited cases only, i.e. when the operation is physically implemented in the relevant NCJ and the risk (if any) that the operation could be misused for Targeted Activities can be mitigated. Such limited exceptions are envisaged in order not to penalise the local population of countries where the EIB has received a mandate to operate.

The EIB Group NCJ Policy applies to:

(i) all New or Renewed Operations and
(ii) all borrowing and treasury activities, where the approach followed shall take into account the specificities of these activities.

The EIB Group NCJ Policy measures may be extended, on a risk-sensitive basis, also to operations with Contracting Counterparties incorporated/ established in jurisdictions which are generally cooperative, but have not yet solved outstanding tax good governance deficiencies (as identified in Annex II of the Council conclusions on the EU list of non-cooperative jurisdictions for tax purposes).

The key principles of the EIB Group NCJ Policy are:

1. Prohibition against entering into New or Renewed Operations with an NCJ Link to a Prohibited Jurisdiction or a Location Link to a Restricted Jurisdiction;
2. Enhanced Vigilance in connection with all operations with NCJ Links; and
3. Reporting obligations to the Board of Directors.

As regards the prohibition principle, it applies to New or Renewed Operations with Contracting Counterparties incorporated/ established in NCJs. Exceptions are possible in limited cases only (please refer to question "Why does the EIB Group support projects in NCJs?").

As regards the enhanced vigilance principle, it may be extended on a risk-sensitive basis to operations with Contracting Counterparties incorporated/ established in ”grey-listed” jurisdictions for tax purposes (please refer to question "Does the EIB Group NCJ Policy apply to jurisdictions grey-listed for tax purposes?").

There are 3 types of the NCJ links:

(i) Location Link: the Contracting Counterparty is established/incorporated in an NCJ;
(ii) Ownership Link: the Contracting Counterparty is owned (as per the meaning of AML Directive) by a legal or natural person established/ incorporated in an NCJ;
(iii) Control Link: the Contracting Counterparty is controlled (as per the meaning of AML Directive) by a legal or natural person established/ incorporated in an NCJ.

For the purposes of the due diligence, on a risk-sensitive basis, a 10% ownership threshold applies.

Relocation requirements apply to new Cross-border Operations with Contracting Counterparties incorporated/established in NCJs prior to a signature of a contract. Cross-border operations are those in the case of which the jurisdiction where the Contracting Counterparty is incorporated/established and the jurisdiction where the operation is physically implemented are different.

If the Contracting Counterparty’s place of incorporation/ establishment becomes classified as an NCJ, the EIB Group will not enter into a New or Renewed Operation with such entity unless it relocates outside the NCJ prior to signing of the contract.

The EU List, included in Annex I of the Council conclusions, is directly and automatically applicable under the EIB Group NCJ Policy. The EIB Group also continues to closely monitor progress of jurisdictions which are generally cooperative, but have not yet solved outstanding tax good governance deficiencies and takes them into account in the tax integrity due diligence process on a risk-sensitive basis (please refer to question "Does the EIB Group NCJ Policy apply to jurisdictions "grey-listed" for tax purposes?").