FATF Graylists and Blacklists

The Financial Action Task Force (FATF) is an inter-governmental body focused on combating financial crime through policy-making. Although it does not have direct enforcement powers, its recommendations and guidelines shape anti-money laundering (AML) and counter-terrorist financing (CTF) standards worldwide. Member states and global financial institutions rely on FATF guidelines to assess risk and build compliance frameworks that mitigate financial threats, from corruption to terrorist funding.

A critical part of the FATF’s strategy is identifying countries and regions that have weak safeguards against financial crime. These countries are placed on either the FATF graylist or blacklist, triggering increased scrutiny and, in some cases, financial sanctions.

What Is the FATF Blacklist?

The FATF Blacklist, officially known as the High-Risk Jurisdictions Subject to a Call for Action, includes countries that are deemed non-cooperative in fighting money laundering, terrorist financing, and proliferation financing. These countries are ones that fail to address significant lapses in their AML/CFT regulations and pose a threat to the global financial system at large.

The FATF urges its members and financial institutions to apply enhanced due diligence (EDD), or in some cases, countermeasures, when engaging with entities from these jurisdictions. The goal is simultaneously:

1. Protect the global financial system by flagging countries with systemic AML/CTF failures.
2. Pressure non-compliant countries and regions to implement reforms by making it difficult for those within the region to access the larger global financial system.

Who is on the FATF Blacklist?

As of the latest FATF update (February 2025), only Iran and North Korea remain on the blacklist. Both countries have a long-standing history of nuclear proliferation, illicit financial flows both in and out, and state-sponsored terrorism.

What Is the “Call for Action” Rule?

The “Call to Action” refers to FATF’s most serious designation. Countries under this rule are blacklisted from financial markets and subject to calls for countermeasures. These can include:

• Refusing correspondent banking relationships
• Heightened scrutiny of transactions
• Increased reporting requirements

These actions make it virtually impossible for blacklisted nations to engage in global trade and finance.

What Is the FATF Greylist?

The FATF greylist, formally referred to as the Jurisdictions Under Increased Monitoring, identifies countries with significant AML/CFT deficiencies that are actively working with the FATF to address them.

Unlike blacklisted countries, greylisted jurisdictions commit to action plans to improve their regulatory frameworks. However, being on the graylist still means increased monitoring and reduced investor confidence.

Key FATF Greylist Criteria Include:

• Weak risk-based supervision of financial institutions
• Gaps in ultimate beneficial ownership (UBO) transparency
• Ineffective investigation and prosecution of financial crimes
• Insufficient international cooperation mechanisms

2025 Updates to the FATF Greylist

The FATF graylist as of February 2025 includes 14 jurisdictions.

Countries Remaining: Burkina Faso, Haiti, Jamaica, Mali, Mozambique, Nigeria, Philippines, Senegal, South Africa, South Sudan, Syria, Türkiye, Uganda, United Arab Emirates, Yeman

Countries Excluded: Cambodia, Panama, Pakistan

Countries Added: None

How Do Countries Get Off the FATF Greylist?

To be removed from the graylist, a country must demonstrate:

• Full implementation of its FATF action plan
• Strong institutional frameworks to detect and prevent financial crime
• Sustained political commitment to AML/CTF reforms

Once a country meets all benchmarks, the FATF conducts an on-site assessment to validate compliance before officially delisting it. This is the process through which Cambodia, Panama, and Pakistan went through to exit the graylist.

FATF-Style Regional Bodies (FSRBs)

The FATF works closely with nine FATF-Style Regional Bodies (FSRBs). These organizations assess compliance within their regions and assist member countries in meeting FATF standards. Together, they form the FATF’s global AML/CFT network.

 

FSRB	Region Covered
APG	Asia-Pacific
MONEYVAL	Europe
EAG	Eurasia
MENAFATF	Middle East & North Africa
CFATF	Caribbean
GABAC	Central Africa
GIABA	West Africa
ESAAMLG	Eastern and Southern Africa
GAFILAT	Latin America

 

Each body works to monitor regional compliance, provide technical assistance, and support FATF mutual evaluations.

Why Do the Blacklist and Greylist Matter?

For Financial Institutions

Corporate entities like banks, fintechs, and other regulated businesses must perform customer due diligence (CDD) and enhanced due diligence (EDD) to detect and prevent financial crime. Screening clients and partners against FATF lists helps identify high-risk associations and inform decisions around onboarding, monitoring, and reporting.

For Governments and Policymakers

Being listed by the FATF can have significant economic and diplomatic consequences. Blacklisted countries face economic sanctions, reduced access to international finance, and increased scrutiny of cross-border transactions. Graylisting often discourages foreign investment and significantly complicates bilateral relationships.

 AML Compliance and FATF Lists in Practice

A risk-based approach to AML includes screening against FATF lists as part of:

• Customer onboarding
• Transaction monitoring
• Ongoing risk assessment

When a suspicious pattern emerges, such as a sudden increase in cross-border payments to a high-risk country or territory, films are expected to file a Suspicious Activity Report (SAR) with relevant authorities. These actions help global regulators tackle financial crime proactively.

How FATF Blacklist and Greylist Practices Are Evolving

In recent years, the FATF has modernized its approach to identifying high-risk jurisdictions. Key developments include:

• Shift to Effectiveness Over Legislation: FATF now emphasizes how well AML/CFT frameworks are enforced in practice, not just whether laws exist.
• Expanded Risk Focus: Jurisdictions are assessed on emerging threats, including virtual asset and crypto service providers (VASPs), transparency of UBOs, and proliferation financing related to WMDs.
• Faster review cycles: Countries on the graylist face tighter deadlines and are expected to show progress between FATF plenary sessions.
• Alignment with global sanctions: Blacklisted jurisdictions increasingly overlap with international sanctions lists, intensifying financial and diplomatic isolation.
• Increased role of regional bodies: FSRBs now play a larger role in peer review, follow-ups, and early warnings.

These updates reflect a more dynamic, risk-responsive FATF process designed to keep pace with evolving global threats.

Final Thoughts

The FATF’s listings have become a central feature of the global financial order. They influence how countries structure their laws, how companies manage risk, and how trust is built across borders. These tools are not about simply punishing countries but about driving systemic change.

For organizations operating internationally, keeping pace with FATF developments is essential. Awareness of these classifications supports smarter decision making, reduces exposure to risk, and reinforces a commitment to financial integrity in an increasingly regulated world.