The Council of the EU, which is composed of the EU member states' governments, said in a statement that the blacklist proposal "was not established in a transparent and resilient process that actively incentivises affected countries to take decisive action while also respecting their right to be heard."
The decision was a sharp rebuke of the European Commission, who had proposed the initiative. It would have included, among others, Saudi Arabia, North Korea and Nigeria, as well as four overseas US territories.
Such a list is used to increase checks and investigations on financial transactions from the included countries in order to find suspicious money flows. Countries placed on the list are considered "high-risk third countries."
The European Commission is empowered to draw up a list of such countries on the basis of evaluations, assessments and reports by relevant organizations. The list can only be enacted if it receives no objection from the Council of the EU or the European Parliament within one month.
"The Commission will now have to propose a new draft list of high-risk third countries that will address member states' concerns," the member states' statement read.
The EU commissioner in charge of preparing the list refuted the member states' criticism, arguing that the list had been produced in a transparent manner.
"I'm disappointed, but I hope I don't look like somebody who is giving up," commissioner Vera Jourova said, promising to come up with a new list "that will not be put into question."