Libya has been removed from the 2019 blacklist of states that engage in money laundering and finance terrorism by the Financial Commission of the European Union.
Saudi Arabia was also removed, while Tunisia remained on the list.
Since March 2019, the blacklist has been a point of controversy among EU member states.
A number of European ministers have claimed that the list was not constructed transparently and did not allow shortlisted countries to take measures to ease sanctions.
The Commission did not clarify the reasons for removing Libya from the blacklist, although the new EU draft list largely mirrors a listing compiled by the global Financial Action Task Force (FATF), which sets the global standard for efforts to curb money laundering.
This new list aims to intensify controls over the countries that pose the greatest risks for money laundering.
On Thursday, the Commission will suggest giving the European Union more powers to tackle financial malfeasance within the bloc after a spate of scandals at large banks dented the EU’s reputation.