A Guide to Anti-Money Laundering for Crypto Firms

What is FATF Grey Lists and Blacklists?

Regulation Knowledge & Training

The Financial Action Task Force (FATF) blacklist (sometimes referred to as the OECD blacklist) is a list of countries that the intragovernmental organization considers non-cooperative in the global effort to combat money laundering and the financing of terrorism. By issuing the list, the FATF hopes to encourage countries to improve their regulatory regimes and establish a global set of AML/CFT standards and norms. 

The FATF also publishes a grey list, in which it sets out countries with deficiencies in their AML/CFT controls, but that have committed to addressing their shortcomings. Given the potential regulatory risk associated with countries that do not maintain international compliance standards, financial institutions should be aware of FATF blacklist and grey list countries and what that designation entails. 

What is FATF Blacklist?

Officially known as High-Risk Jurisdictions subject to a Call for Action, the FATF blacklist sets out the countries that are considered deficient in their anti-money laundering and counter-financing of terrorism regulatory regimes. The list is intended to serve not only as a way of negatively highlighting these countries on the world stage, but as a warning of the high money laundering and terrorism financing risk that they present. It is extremely likely that blacklisted countries will be subject to economic sanctions and other prohibitive measures by FATF member states and international organizations.

The blacklist is a living document that is issued and updated periodically in official FATF reports. Countries are added and withdrawn from the blacklist as their AML and CFT regulatory regimes are adjusted to meet the relevant FATF standards. The first FATF blacklist was issued in 2000 with an initial list of 15 countries. Since then, the lists have been issued as part of official FATF statements and reports on a yearly, and sometimes twice-yearly, basis. As of January 2022, the following countries were included on the FATF blacklist:

  • North Korea
  • Iran

The FATF cites significant deficiencies in both blacklisted countries’ AML/CFT regimes and suggests other countries exercise extreme caution when doing business with firms based in either. While the FATF has called on its member-states to “apply effective counter-measures” in any business dealings with North Korea and Iran, it has noted Iran’s prior commitment to improving its AML/CFT regulation. Accordingly, the FATF has set out the steps for Iran’s removal from the list, including a requirement for it to ratify the Palermo and Terrorist Financing Conventions

While it has no direct investigatory powers, the FATF monitors global AML/CFT regimes closely to inform the content of its blacklists. Some observers have criticized the use of the term ‘non-cooperative’ in reference to countries on the blacklist, pointing out that some blacklisted countries may, rather than acting in defiance of international best practice, simply not have the regulatory infrastructure or resources to enact the FATF’s AML/CFT standards.

What is FATF Grey List?

In addition to its blacklist, the FATF also issues a grey list, officially referred to as Jurisdictions Under Increased Monitoring. Like the blacklist, countries on the FATF grey list represent a much higher risk of money laundering and terrorism financing but have formally committed to working with the FATF to develop action plans that will address their AML/CFT deficiencies.

The countries on the grey list are subject to increased monitoring by the FATF, which either assesses them directly or uses FATF-style regional bodies (FSRBs) to report on the progress they are making towards their AML/CFT goals. While grey list classification is not as punitive as the blacklist, countries on the list may still face economic sanctions from institutions like the International Monetary Fund (IMF) and the World Bank, and experience adverse effects on trade.

The grey list is updated regularly as new countries are added or as countries that complete their action plans are removed. As of March 2022, the FATF grey list included the following countries: 

  • Albania
  • Barbados
  • Burkina Faso
  • Cambodia
  • Cayman Islands
  • Haiti
  • Jamaica
  • Jordan
  • Mali
  • Malta
  • Morocco
  • Myanmar
  • Nicaragua
  • Pakistan
  • Panama
  • Philippines
  • Senegal
  • South Sudan
  • Syria
  • Turkey
  • Uganda
  • United Arab Emirates
  • Yemen

Recent Additions to FATF Grey List and Blacklists 

The FATF continuously reviews its member states’ AML/CFT performance in order to gauge their alignment with its regulatory guidance. The FATF has recently added the following countries to the grey list: 

Jordan: Following a Mutual Evaluation Report (MER) in 2019, Jordan made a commitment to addressing deficiencies in its domestic money laundering and terrorism financing regulations. In October 2021, FATF determined that Jordan had not made sufficient progress towards those objectives and it was added to the grey list. 

Mali: The FATF added Mali to the grey list in October 2021. Like Jordan, Mali’s addition to the grey list was motivated by a lack of progress towards achieving objectives set out in its 2019 MER. The FATF primarily focused on risks in the country related to terrorist financing. 

Turkey: The FATF added Turkey to the grey list in October 2021 after determining that it had not made sufficient progress towards addressing the issues set out in its 2019 MER. The FATF cited specific concerns about the terror financing threats from Turkey’s neighbours, Syria, Lebanon, Iraq, and Iran. 

United Arab Emirates (UAE): The FATF added the UAE to the grey list in March 2022 following a Plenary and Working Group Meeting in February 2022. The FATF determined that while the UAE had made “significant progress” since its 2020 assessment on issues related to money laundering, terrorism financing, confiscating criminal proceeds and international cooperation, further progress is required to ensure investigations and prosecutions of money laundering cases are “consistent with UAE’s risk profile”.

Recent Removals from FATF Grey List and Blacklists 

Just as countries are added to the blacklist and grey list on a regular basis, countries that make progress in addressing their AML/CFT deficiencies are removed from the lists. With that in mind, the FATF recently removed the following countries from the grey list. 

Mauritius: In 2020, FATF added Mauritius to the grey list citing deficiencies in its beneficial ownership controls, and its procedures for confiscating the proceeds of crime. After following the FATF’s action plan to address those deficiencies, including developing new risk-based supervision plans and law enforcement training plans, Mauritius was removed from the grey list in February 2021

Botswana: Botswana was added to the FATF’s grey list in 2018. In 2021, following a series of assessments from the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), Botswana was deemed compliant with previously-cited AML/CFT deficiencies. Accordingly, FATF removed Botswana from the grey list.

Bahamas: The Bahamas was removed from the grey list in December 2020. The FATF cited the Bahama’s ‘significant progress’ in strengthening its AML/CFT systems following deficiencies identified in 2018. 

Ghana: Like the Bahamas, Ghana was added to the grey list in 2018. After it completed its strategic action plan, FATF determined that Ghana had made sufficient AML/CFT progress, and removed it from the grey list in 2021. 

Zimbabwe: Zimbabwe was added to the grey list in 2019 after its assessment highlighted various deficiencies in the country’s implementation of the Anti-Money Laundering and Counter Financing of Terrorism (AML/CTF) Standards. As of March 2022, the FATF’s report cited Zimbabwe’s “significant progress” in improving its AML/CTF regime and its effectiveness, thus removing the country from the grey list.

Grey list and Blacklist Screening and Monitoring

Given the increased risk of money laundering and terror financing that blacklisted and grey listed countries present, most financial authorities require firms to have suitable risk-based AML/CFT protections in place to mitigate that threat. 

Accordingly, firms must screen customers against the FATF blacklist and grey list during onboarding and throughout their business relationship, and monitor their transactions on an ongoing basis. To screen accurately, firms should ensure that their customer due diligence measures verify their customer’s residence in, or business with, listed countries. They should also check that their transaction monitoring measures are able to scrutinize the size, frequency and pattern of transactions involving high-risk countries to establish whether criminal activity such as money laundering is taking place. 

When suspicious activity is detected, firms must submit suspicious activity reports (SAR) to the appropriate financial authorities so that enforcement actions can be taken.

 

Try our Screening Solution for Free

Screen any name or entity against live Sanctions, PEPs and Adverse Media data and insights for free

Screen for Free
The Financial Action Task Force (FATF) blacklist (sometimes referred to as the OECD blacklist) is a list of countries that the intragovernmental organization considers non-cooperative in the global effort to combat money laundering and the financing of terrorism. By issuing the list, the FATF hopes to encourage countries to improve their regulatory regimes and establish a global set of AML/CFT standards and norms.  The FATF also publishes a grey list, in which it sets out countries with deficiencies in their AML/CFT controls, but that have committed to addressing their shortcomings. Given the potential regulatory risk associated with countries that do not maintain international compliance standards, financial institutions should be aware of FATF blacklist and grey list countries and what that designation entails. 

What is FATF Blacklist?

Officially known as High-Risk Jurisdictions subject to a Call for Action, the FATF blacklist sets out the countries that are considered deficient in their anti-money laundering and counter-financing of terrorism regulatory regimes. The list is intended to serve not only as a way of negatively highlighting these countries on the world stage, but as a warning of the high money laundering and terrorism financing risk that they present. It is extremely likely that blacklisted countries will be subject to economic sanctions and other prohibitive measures by FATF member states and international organizations. The blacklist is a living document that is issued and updated periodically in official FATF reports. Countries are added and withdrawn from the blacklist as their AML and CFT regulatory regimes are adjusted to meet the relevant FATF standards. The first FATF blacklist was issued in 2000 with an initial list of 15 countries. Since then, the lists have been issued as part of official FATF statements and reports on a yearly, and sometimes twice-yearly, basis. As of January 2022, the following countries were included on the FATF blacklist:
  • North Korea
  • Iran
The FATF cites significant deficiencies in both blacklisted countries’ AML/CFT regimes and suggests other countries exercise extreme caution when doing business with firms based in either. While the FATF has called on its member-states to “apply effective counter-measures” in any business dealings with North Korea and Iran, it has noted Iran’s prior commitment to improving its AML/CFT regulation. Accordingly, the FATF has set out the steps for Iran’s removal from the list, including a requirement for it to ratify the Palermo and Terrorist Financing Conventions While it has no direct investigatory powers, the FATF monitors global AML/CFT regimes closely to inform the content of its blacklists. Some observers have criticized the use of the term ‘non-cooperative’ in reference to countries on the blacklist, pointing out that some blacklisted countries may, rather than acting in defiance of international best practice, simply not have the regulatory infrastructure or resources to enact the FATF’s AML/CFT standards.

What is FATF Grey List?

In addition to its blacklist, the FATF also issues a grey list, officially referred to as Jurisdictions Under Increased Monitoring. Like the blacklist, countries on the FATF grey list represent a much higher risk of money laundering and terrorism financing but have formally committed to working with the FATF to develop action plans that will address their AML/CFT deficiencies. The countries on the grey list are subject to increased monitoring by the FATF, which either assesses them directly or uses FATF-style regional bodies (FSRBs) to report on the progress they are making towards their AML/CFT goals. While grey list classification is not as punitive as the blacklist, countries on the list may still face economic sanctions from institutions like the International Monetary Fund (IMF) and the World Bank, and experience adverse effects on trade. The grey list is updated regularly as new countries are added or as countries that complete their action plans are removed. As of March 2022, the FATF grey list included the following countries: 
  • Albania
  • Barbados
  • Burkina Faso
  • Cambodia
  • Cayman Islands
  • Haiti
  • Jamaica
  • Jordan
  • Mali
  • Malta
  • Morocco
  • Myanmar
  • Nicaragua
  • Pakistan
  • Panama
  • Philippines
  • Senegal
  • South Sudan
  • Syria
  • Turkey
  • Uganda
  • United Arab Emirates
  • Yemen

Recent Additions to FATF Grey List and Blacklists 

The FATF continuously reviews its member states' AML/CFT performance in order to gauge their alignment with its regulatory guidance. The FATF has recently added the following countries to the grey list:  Jordan: Following a Mutual Evaluation Report (MER) in 2019, Jordan made a commitment to addressing deficiencies in its domestic money laundering and terrorism financing regulations. In October 2021, FATF determined that Jordan had not made sufficient progress towards those objectives and it was added to the grey list.  Mali: The FATF added Mali to the grey list in October 2021. Like Jordan, Mali’s addition to the grey list was motivated by a lack of progress towards achieving objectives set out in its 2019 MER. The FATF primarily focused on risks in the country related to terrorist financing.  Turkey: The FATF added Turkey to the grey list in October 2021 after determining that it had not made sufficient progress towards addressing the issues set out in its 2019 MER. The FATF cited specific concerns about the terror financing threats from Turkey’s neighbours, Syria, Lebanon, Iraq, and Iran.  United Arab Emirates (UAE): The FATF added the UAE to the grey list in March 2022 following a Plenary and Working Group Meeting in February 2022. The FATF determined that while the UAE had made “significant progress” since its 2020 assessment on issues related to money laundering, terrorism financing, confiscating criminal proceeds and international cooperation, further progress is required to ensure investigations and prosecutions of money laundering cases are "consistent with UAE's risk profile".

Recent Removals from FATF Grey List and Blacklists 

Just as countries are added to the blacklist and grey list on a regular basis, countries that make progress in addressing their AML/CFT deficiencies are removed from the lists. With that in mind, the FATF recently removed the following countries from the grey list.  Mauritius: In 2020, FATF added Mauritius to the grey list citing deficiencies in its beneficial ownership controls, and its procedures for confiscating the proceeds of crime. After following the FATF’s action plan to address those deficiencies, including developing new risk-based supervision plans and law enforcement training plans, Mauritius was removed from the grey list in February 2021 Botswana: Botswana was added to the FATF’s grey list in 2018. In 2021, following a series of assessments from the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), Botswana was deemed compliant with previously-cited AML/CFT deficiencies. Accordingly, FATF removed Botswana from the grey list. Bahamas: The Bahamas was removed from the grey list in December 2020. The FATF cited the Bahama’s ‘significant progress’ in strengthening its AML/CFT systems following deficiencies identified in 2018.  Ghana: Like the Bahamas, Ghana was added to the grey list in 2018. After it completed its strategic action plan, FATF determined that Ghana had made sufficient AML/CFT progress, and removed it from the grey list in 2021.  Zimbabwe: Zimbabwe was added to the grey list in 2019 after its assessment highlighted various deficiencies in the country's implementation of the Anti-Money Laundering and Counter Financing of Terrorism (AML/CTF) Standards. As of March 2022, the FATF’s report cited Zimbabwe’s “significant progress” in improving its AML/CTF regime and its effectiveness, thus removing the country from the grey list.

Grey list and Blacklist Screening and Monitoring

Given the increased risk of money laundering and terror financing that blacklisted and grey listed countries present, most financial authorities require firms to have suitable risk-based AML/CFT protections in place to mitigate that threat.  Accordingly, firms must screen customers against the FATF blacklist and grey list during onboarding and throughout their business relationship, and monitor their transactions on an ongoing basis. To screen accurately, firms should ensure that their customer due diligence measures verify their customer’s residence in, or business with, listed countries. They should also check that their transaction monitoring measures are able to scrutinize the size, frequency and pattern of transactions involving high-risk countries to establish whether criminal activity such as money laundering is taking place.  When suspicious activity is detected, firms must submit suspicious activity reports (SAR) to the appropriate financial authorities so that enforcement actions can be taken.   [cta_card title="Try our Screening Solution for Free" cta_img="" category="" bodytext="Screen any name or entity against live Sanctions, PEPs and Adverse Media data and insights for free" cta_text="Screen for Free" cta_url="https://complyadvantage.com/complytry/"]

Originally published March 23, 2020, updated August 1, 2022

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

Copyright © 2022 IVXS UK Limited (trading as ComplyAdvantage).