The UK Government has expressed its deep dissatisfaction with the European Parliament after it kept Gibraltar on the EU‘s money-laundering watchlist.

The move came after 490 MEPs voted and agreed to block the removal of the British overseas territory, along with the UAE, Barbados, Panama, and Uganda from its list.

The European Parliament’s approved text stated that there was “important and recent evidence suggesting” that these countries “lack efforts in addressing, or even facilitate the evasion of, sanctions imposed on Russia,” potentially allowing them to act as platforms for circumventing sanctions against Russia.

A UK Government spokesperson, who declined to be named, firmly denied these claims, telling Politico: “It is completely inaccurate and unsubstantiated to suggest Gibraltar is undermining sanctions efforts against Russia.”

The spokesperson emphasised that “UK sanctions apply in full, and are enforced, in all UK overseas territories and crown dependencies.”

Despite objections from the European Commission and the EU’s diplomatic service, which both supported removing Gibraltar and the other countries from the list, the European Parliament’s vote keeps Gibraltar on the EU’s list of high-risk countries.

This means EU banks will have to perform “enhanced due diligence” on cash transfers involving the territory, complicating business interactions.

Global watchdog the Financial Action Task Force had previously removed these countries from its watchlist in February, paving the way for the European Commission’s recommendation to remove them from the EU’s list. However, the European Parliament’s recent vote goes against this trend.

Gibraltar’s government issued a statement after the vote, criticising the European Parliament’s stance as “clearly not the result of any technical assessment” and “a position poisoned by politics.” The statement named specific Spanish MEPs and political groups as responsible for the push to keep Gibraltar on the list.

This development comes at a delicate time for EU-UK relations, with the two sides currently finalizing the details of a future agreement on Gibraltar, which was left out of the main Brexit deal due to Spain’s insistence. Earlier this month, UK foreign minister David Cameron visited Gibraltar to discuss the agreement’s terms. A joint statement from both sides noted “significant progress,” indicating the deal could be concluded “over the coming weeks.”

Additionally, a second text, which referred to Gibraltar as a “colony” of the UK, was voted down by EU lawmakers. The UK government spokesperson reacted to this characterization, saying it “reject[s] the outdated characterisation.”