Understanding the FATF Black and Grey Lists in 2024

The Financial Action Task Force (FATF) is an intergovernmental organization established in 1989, with the objective of developing and promoting policies to combat money laundering and terrorist financing. The FATF plays a crucial role in fostering international collaboration by working with regional bodies and financial institutions.

As part of its mission, the FATF lists certain countries on its black or grey lists, otherwise known as the FATF sanctions lists. These lists include jurisdictions with weak measures to combat money laundering and terrorist financing (AML/CFT).  Therefore,  businesses are advised to apply additional checks when dealing with customers from black- and grey-listed regions. 

Let’s dive into the details of these lists and how businesses can effectively screen customers against various sanction lists and watchlists.

FATF grey list vs black list

The FATF maintains two primary lists to identify countries with deficient AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) measures.

• Black list: Also known as the “high-risk Jurisdictions subject to a call for action” or the “list of high risk and non-cooperative countries”, the black list includes jurisdictions that are considered non-cooperative in the global effort to combat money laundering and terrorist financing. Countries on the black list face severe economic sanctions and restrictions on international financial transactions.
• Grey list: Also known as the “Jurisdictions Under Increased Monitoring,” the grey list includes countries that have strategic deficiencies in their AML/CFT regimes but have committed to addressing these issues. Countries on the grey list are closely monitored by the FATF and are required to report on the progress of their improvements.

Implications of being on the FATF’s black and grey lists

Countries placed on the FATF’s black or grey lists face significant economic and financial consequences:

• Economic impact: Listed countries can see less foreign investment, slower economic growth, and more costly international financial transactions. These countries may also face a decrease in investor confidence and international trade.
• Regulatory burdens: Financial institutions in listed countries are subject to stricter compliance requirements. This increases operational costs and complicates transactions with global partners. Businesses must therefore adopt Enhanced Due Diligence measures to mitigate risks associated with financial crimes for higher-risk cases.

Suggested read: The 10 Most Common AML Red Flags 2024—Complete Guide

Countries currently listed by the FATF

• Black list: As of June 2024, the following countries are on the FATF black list: North Korea, Iran, and Myanmar. These countries face severe economic sanctions and isolation from the international financial system.
• Grey list: As of June 2024, the following countries are on the FATF grey list: Bulgaria, Burkina Faso, Cameroon, Croatia, Democratic Republic of the Congo, Haiti, Kenya, Mali, Monaco, Mozambique, Namibia, Nigeria, Philippines, Senegal, South Africa, South Sudan, Syria, Tanzania, Venezuela, Vietnam, Yemen 

Suggested read: South Africa Greylisted—How Businesses can Protect against Money Laundering in 2024

Check out Sumsub’s Fraudlympics—a competition where medals go to the countries with the highest fraud growth. Explore the fraud trends by type and industry here.

Getting off the FATF black and grey lists

To be removed from these lists, countries must address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. This usually includes working on the following:

• Enhancing AML/CFT frameworks: Countries need to strengthen their legal and regulatory frameworks to comply with international standards.
• Cooperation with international bodies: Active collaboration with the FATF and other international organizations is essential.
• Regular assessments: Countries must submit to regular assessments and provide progress reports to the FATF.

For instance, in June 2024, Turkey was removed from the FATF grey list after making significant progress in strengthening its AML/CFT regime and enhancing its financial system. Earlier this year, in February, the United Arab Emirates were also removed from the FATF grey list.

The FATF lists and AML compliance 

Regulatory requirements and institutional policies may dictate the use of FATF lists in anti-money laundering (AML) and counter-terrorism financing (CTF) efforts. 

To ensure AML compliance when potentially dealing with listed countries, businesses should consider the following measures:

1.  When carrying out Customer Due Diligence measures, businesses must remember to screen customers’ residency and/or nationality in order to properly assess whether the  person is related to any  FATF black- or grey-listed countries. 
2. The Transaction Monitoring software employed should be capable of analyzing the size, frequency, and pattern of transactions involving FATF high-risk countries to detect potential criminal activities, such as money laundering. Automated transaction monitoring systems integrate multiple data sources to flag suspicious activities in real-time, with FATF lists being one of many components.
3. Automated AML screening can be used to monitor individuals on global sanctions lists, including OFAC, UN, EU, and others.

Suggested read: Understanding the UN Sanctions

FAQ

• How many countries are part of the  FATF?

  There are currently 40 members of the FATF, with 38 jurisdictions and two regional organizations (the Gulf Cooperation Council and the European Commission). 

• What is the difference between the white list, grey list, and black list?

  Typically, countries with robust AML/CFT measures are on the ‘white list’. The grey list includes countries with strategic deficiencies that are committed to improvements, while the black list contains countries with severe deficiencies and no cooperation in terms of AML/CFT.

• What happens if you are on the FATF black list?

  Countries on the FATF black list face slower economic growth and more costly international financial transactions. These jurisdictions may also face a decrease in investor confidence and international trade. This increases operational costs and complicates transactions with global partners.

• What happens when a country is greylisted?

  Being greylisted means being placed onto a list of “jurisdictions under increased monitoring” due to the weaknesses in AML/CFT regimes. Being on the FATF’s grey list can have negative consequences for a country’s financial system. It can scare off investors  and lead to increased scrutiny from international regulators, making it  difficult for the country to access international financial markets.