European Commission headquarters in Brussels.
The Saudi government media office did not immediately respond to a request for comment.
Despite pressure to exclude Riyadh from the list, the commission made a decision to list the kingdom, confirming a Reuters report in January.
In total 23 jurisdictions are listed.
"We have established the strongest anti-money laundering standards in the world, but we have to make sure that dirty money from other countries does not find its way to our financial system", European Union commissioner for justice, consumers and gender equality Vera Jourova said.
Afghanistan, Ethiopia, Iran, Iraq, North Korea, Pakistan, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen made up the list.
Bosnia Herzegovina, Guyana, Laos, Uganda and Vanuatu were removed. They could reject it by a qualified majority.
She said it was urgent to act because "risks spread like wildfire in the banking sector".
Apart from reputational damage, inclusion on the list complicates financial relations with the EU.
The European Commission also added Saudi Arabia, Panama, and other jurisdictions to the blacklist, the EU executive said on Wednesday. Royal Bank of Scotland is the European bank with the largest turnover in Saudi Arabia, with around 150 million euros ($169.28 million) in 2015, according to public data.
Countries are listed if they have "strategic deficiencies in their anti-money laundering and countering the financing of terrorism regimes", according to the commission's working document.
The EU released its first ever blacklist previous year in the wake of the Panama Papers leak, but was widely criticised for failing to apply its criteria to its own states which have some of the world's worst tax havens.
Critics said the list fell short of including several countries involved in money-laundering scandals in Europe. "Dirty money is the lifeblood of organized crime and terrorism". "These include Russian Federation, the City of London and its offshore territories as well as Azerbaijan", said Greens lawmaker Sven Giegold, who sits in the European Parliament special committee on financial crimes.
She added the commission would continue monitoring other jurisdictions not yet listed. Among the states that will be closely monitored are the United States and Russian Federation.