EU members must now approve the proposal, with deep opposition expected from France and Britain to adding Saudi Arabia. The oil-rich kingdom was one of a number of countries added to the list which now has 23 jurisdictions, up from 16.
Saudi Arabia said it regrets the European Commission's decision to include the country in a blacklist of nations seen as posing a threat to the bloc because of lax controls against terrorism financing and money laundering, a statement published by Saudi Press Agency said early on Thursday.
It came after the EU executive said on Wednesday that the European Commission added Saudi Arabia, Panama, Nigeria and other jurisdictions to the list.
"Saudi Arabia's commitment to combating money laundering and the financing of terrorism is a strategic priority and we will continue to develop and improve our regulatory and legislative frameworks to achieve this goal", the statement quoted Saudi Finance Minister Mohammed al Jadaan as saying.
The move is part of a crackdown against money laundering after several scandals hit EU banks in recent months.
But it has triggered criticism from several EU states worried about their economic relations with the listed states, notably Saudi Arabia.
Despite pressure to exclude Riyadh from the list, the commission decided to list the kingdom.
TRT World's Simon McGregor-Wood reports.
Apart from reputational damage, inclusion on the list complicates financial relations with the EU.
The Commission also added Libya, Botswana, Ghana, Samoa, the Bahamas and the four United States territories of American Samoa, US Virgin Islands, Puerto Rico and Guam.
The other listed states are Afghanistan, North Korea, Ethiopia, Iran, Iraq, Pakistan, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen.
Bosnia Herzegovina, Guyana, Laos, Uganda and Vanuatu were removed.
The list now includes 23 jurisdictions; it previously comprised 16.
TRT World spoke to Kevin Ozebek in Brussels for more.
The 28 EU states now have one month, which can be extended to two, to endorse the list.
They could reject it by qualified majority. EU justice commissioner Vera Jourova, who proposed the list, told a news conference she was confident states would not block the list.