UPDATE 1-EU states block blacklisting Saudi, Panama over dirty money

The 28 member states of the European Union all backed a decision on Thursday to reject a proposal from the EU executive to add Saudi Arabia to a blacklist of countries suspected of being lax on terrorist financing and money laundering.

The decision comes after pressure from Riyadh and other listed jurisdictions not to be blacklisted. EU states said in a statement the unanimous decision was taken because the European Commission's proposed list was not established in a transparent process that encouraged countries to take action while also respected their right to be heard.

The decision, which confirms Reuters reports last week, will force the European Commission to prepare a new list . "I'm disappointed, but I hope I don't look like somebody who is giving up," the EU commissioner in charge of the listing, Vera Jourova, said on Thursday.

She said the process had been conducted in a transparent manner and followed EU states' commitments to act against money laundering and terrorism financing. (Reporting by Francesco Guarascio and Alastair Macdonald; Editing by Angus MacSwan)