It is no secret that certain countries adhere to stricter Anti-Money Laundering (AML) regulations than others. To ensure regulations around the world are fair, three times a year, the Financial Action Task Force (FATF) publishes two lists of jurisdictions that it considers to have strategic deficiencies in their AML and Counter-Terrorist Financing (CTF) regimes. Today, we will look at these lists and how they affect your business.

Countries on the FATF Blacklist 

As of February 2024, the FATF blacklist, made up of high-risk jurisdictions subject to enhanced due diligence, includes just three jurisdictions:

Democratic People’s Republic of Korea

The FATF remains concerned by the DPRK’s failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism regime and the serious threats they pose to the integrity of the international financial system. 

The FATF’s statement on DPRK has not changed since 2011, when it called on the FATF member nations and urged all jurisdictions to give special attention to business relationships and transactions with the DPRK, including DPRK companies, financial institutions, and those acting on their behalf. In addition to enhanced scrutiny, the FATF further calls on its members and urges all jurisdictions to apply effective counter-measures.

Iran

In 2016, Iran committed to address its strategic deficiencies. However, the action plan has since expired without completion. Therefore, in October 2019, the FATF called upon its members and urged all jurisdictions to: require increased supervisory examination for branches and subsidiaries of financial institutions based in Iran; introduce enhanced relevant reporting mechanisms or systematic reporting of financial transactions; require increased external audit requirements for financial groups with respect to any of their branches and subsidiaries located in Iran.

Myanmar

In 2020, Myanmar committed to address its strategic deficiencies. This action plan expired in September 2021.

Given the continued lack of progress and the majority of its action items still not addressed, the FATF decided that further action was necessary in line with its procedures, and it calls on its members and other jurisdictions to apply enhanced due diligence measures proportionate to the risk arising from Myanmar. When applying enhanced due diligence measures, countries should ensure that flows of funds for humanitarian assistance, legitimate NPO activity and remittances are not disrupted.

Countries on the FATF Grey List 

Since the last Grey list publication, four jurisdictions have left the list, which includes Barbados, Gibraltar, Uganda and the United Arab Emirates.

The FATF grey list, which includes jurisdictions currently working on eliminating their strategic deficiencies, is made up of 21 countries:

🇧🇬 Bulgaria🇰🇪 Kenya🇿🇦 South Africa
🇧🇫 Burkina Faso🇲🇱 Mali🇸🇸 South Sudan
🇨🇲 Cameroon🇲🇿 Mozambique🇸🇾 Syria
🇭🇷 Croatia🇳🇦 Namibia🇹🇿 Tanzania
🇨🇩 DR of Congo🇳🇬 Nigeria🇹🇷 Türkiye
🇭🇹 Haiti🇵🇭 Philippines🇻🇳 Vietnam
🇯🇲 Jamaica🇸🇳 Senegal🇾🇪 Yemen

It’s worth noting that Syria and Yemen have completed their action plans and are an on-site visit away from getting off the FATF grey list. 

Grey List vs Black List

FATF’s blacklist recognises jurisdictions with significant strategic shortcomings in their efforts to combat money laundering and terrorist financing. The FATF requests that all members and jurisdictions apply enhanced due diligence to all countries on the blacklist. In the most extreme circumstances, countries are also asked to implement counter-measures to safeguard the international financial system against ongoing risks. 

FATF’s grey list, however, identifies countries that are actively working with FATF to improve their AML processes and address strategic deficiencies in their systems. To be included on a grey list, a country must agree to an action plan. These plans involve several steps, such as national risk assessment, political commitment to work on the effectiveness of its AML, as well as countering terrorist financing and money laundering measures. Countries on these lists are given a timeframe to improve and are continuously monitored by the FATF. 

How do the Lists Affect Your Business?

To combat the dire financial crime situation, the FATF calls for enhanced due diligence and urges everyone to take necessary measures to close existing branches, subsidiaries and representative offices in blacklisted countries, as well as terminate correspondent relationships with the financial institutions in blacklisted countries.

As for the grey list, The FATF does not call for the application of enhanced due diligence measures to be applied to these jurisdictions. Instead, they call for the application of a risk-based approach. Therefore, the FATF encourages its members and all jurisdictions to take grey-listed countries into account in their risk analysis.

Why are the FATF Lists Necessary?

These lists are essentially a way for FATF to encourage countries to strengthen the effectiveness of their anti-money laundering and counter-terrorist financing measures. On top of protecting and keeping businesses informed, the FATF’s process to publicly list countries with weak AML/CFT regimes has proven effective. As of February 2024, the FATF has reviewed over 131 countries and jurisdictions. Of these, 82 have since made the necessary reforms to address their AML/CFT weaknesses and have been removed from the process.

Stay Compliant with Ondato 

Adhering to FATF recommendations protects both your business and the overall economy from financial crime. At Ondato, we want to help you achieve this, which is why our solutions allow you to stay compliant with even the strictest AML regulations, such as FINMA in Switzerland. With this, we also ensure you can avoid doing business with blacklisted jurisdictions, include customer due diligence, transaction and AML monitoring solutions

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    FAQ

    The Financial Action Task Force is an international organisation that sets standards and promotes measures to combat money laundering, terrorist financing, and other related threats to the integrity of the international financial system.
    To appropriately react to these lists, your company needs to:

    Blacklist: Cut ties with companies named on the blacklist, especially any financial institutions, as well as implement counter-measures.

    Grey list: Perform extensive verification processes before entering into any business relationships with these jurisdictions, as well as set up monitoring for any existing clients in these jurisdictions.
    The most significant implication to greylisted countries is the reputational damage. FATF’s lists point out that the country’s effectiveness in combating financial crimes like corruption, money laundering and terrorist financing are below international standards.

    This reputational damage can result in foreign financial institutions taking action with regard to cross-border transactions.