What's FATF GREY and Black Lists?

Bashir Nakib 

The Financial Action Task Force (FATF) is an intergovernmental organization, initially founded in 1989 to develop policies that combat money laundering. Its role expanded in 2001 to additionally develop policies that combat terrorist and proliferation financing of WMD. 

Much of the FATF’s work consists of staying up to date on the trends of money laundering and terrorist financing, developing recommendations for combatting these trends and assessing that countries are properly implementing these FATF recommendations. As part of assessing countries’ success in implementing these recommendations, the FATF releases assessments more colloquially known as the FATF grey list and blacklist.

What is the FATF Grey List?

The FATF grey list outlines the countries or jurisdictions that the FATF deems as ‘jurisdictions under increased monitoring.’ These are countries that are actively working with the FATF to address the strategic deficiencies in their regimes to counter money laundering, terrorist financing and proliferation financing. 

What Countries Are Currently on the Grey List?

According to the FATF’s most recent statement of the Jurisdictions Under Increased Monitoring, released October 27, 2023, the following countries are currently on the grey list:

Barbados

Bulgaria

Burkina Faso

Cameroon

The Democratic Republic of Congo

Croatia

Gibraltar

Haiti

Jamaica

Mali

Mozambique

Nigeria

Philippines

Senegal

South Africa

South Sudan

Syria

Tanzania

Turkey

Uganda

The United Arab Emirates

Vietnam

Yemen

 

The FATF has also stated that both Nicaragua and Pakistan are no longer on the grey list. 

What is the FATF Blacklist?

The FATF ‘blacklist’ outlines ‘high-risk jurisdictions subject to a call for action.’ These are countries or jurisdictions that have serious deficiencies in countering money laundering, terrorist financing and financing of proliferation of WMD.1

The FATF calls on all of its members to apply enhanced due diligence and in some cases counter-measures, on jurisdictions listed on the blacklist.

What Countries Are Currently on the Black List?

According to the most recent publication of High Risk Jurisdictions Subject to a Call for Action released on October 26, 2023, the FATF has called on its members and other jurisdictions to apply countermeasures to both the Democratic People’s Republic of Korea (DPRK) and Iran. 

In the same publication, the FATF has called on its members and other jurisdictions to apply enhanced due diligence measures on Myanmar.

Grey Lists, Blacklists and AML Compliance

The FATF grey and blacklists can serve as valuable resources for compliance professionals. Firms should screen existing and new clients against these lists and have risk-based processes in place when dealing with individuals or organizations that operate in these jurisdictions. 

It is also important to note that these lists can change. The FATF releases two public documents (one for each list) three times a year, where it is possible that jurisdictions are added or removed from each list based on FATF assessments.

 

Screening

To ensure AML compliance, it is important that businesses screen customers against both black and grey lists. This is true for both the onboarding of new customers, but also for existing customers as lists can change and new jurisdictions can be added. Part of complying with FATF recommendations and ensuring a robust compliance program includes the use of a sanctions and watchlist screening tool for the individuals and corporations your business deals with.

Customer Due Diligence

It is also vital to have robust customer due diligence (CDD) processes in place so that your business can accurately verify the countries where your clients are operating. This is essential, as when clients are working in grey or blacklist countries, you are required to have a robust enhanced due diligence (EDD) process in place on risk based approach (RBA)

Transaction Monitoring

Once your screening and due diligence procedures are able to accurately identify new and existing customers located in black or grey-listed countries, the transactions these entities place must be properly monitored. Ensure that your AML program has a real-time transaction monitoring solution to detect and report suspicious transactions.