The FATF Grey List and Black List Explained

Financial crime risks can expose weaknesses in a country's financial system. The Financial Action Task Force (FATF) identifies these gaps and sets global standards to combat money laundering and terrorist financing. Its standards have been endorsed by more than 200 countries and jurisdictions.

The FATF grey list and FATF blacklist identify countries with strategic financial crime prevention deficiencies. These classifications can influence banking relationships, international investments, and cross-border transactions, making them important for businesses operating globally.

Understanding high risk jurisdictions FATF identifies is essential for effective AML compliance. This guide explains the differences between both lists, how countries are classified, their impact on businesses, and practical strategies for managing financial crime risks.

What Is the Financial Action Task Force (FATF)? 

The Financial Action Task Force (FATF), established in 1989, sets global standards to combat money laundering, terrorist financing, and proliferation financing. Through its 40 Recommendations, FATF evaluates national AML/CFT systems and identifies countries with strategic deficiencies. It publishes the FATF grey list for jurisdictions under increased monitoring and the FATF blacklist for high-risk jurisdictions subject to a call for action. While FATF sets standards, countries enforce them through national laws.

What Is the FATF Grey List? 

The FATF grey list, officially called Jurisdictions under Increased Monitoring, identifies countries with strategic weaknesses in their anti-money laundering, counter-terrorist financing, and counter-proliferation financing (AML/CFT/CPF) systems. Unlike countries on the FATF blacklist, greylisted jurisdictions have committed to addressing these deficiencies through agreed action plans and timelines under FATF monitoring.

Why Are Countries Added to the FATF Grey List?

Countries are added to the FATF grey list when significant weaknesses limit their ability to prevent and combat financial crime. Common reasons include:

• Weak AML/CFT regulations: Inadequate laws and controls to prevent money laundering and terrorist financing.
• Poor regulatory enforcement: Limited supervision and ineffective enforcement of financial crime prevention measures.
• Lack of ownership transparency: Difficulty identifying the ultimate beneficial owners behind companies and legal structures.
• Insufficient financial investigations: Weak financial intelligence, investigations, or prosecution of financial crimes.
• Terrorist and proliferation financing gaps: Inadequate controls to identify, prevent, and disrupt illicit financing activities.

What Happens When a Country Is Greylisted?

Countries on the FATF grey list face increased international scrutiny and must implement FATF-approved action plans within agreed timelines. FATF periodically reviews their progress and may remove them from the list once strategic deficiencies are adequately addressed.

Greylisting can also affect international banking relationships, cross-border payments, and foreign investment. Financial institutions may apply closer scrutiny to transactions involving these jurisdictions, although greylisting does not automatically trigger sanctions or mandatory enhanced due diligence.

What Is the FATF Black List? 

The FATF blacklist, officially known as High-Risk Jurisdictions Subject to a Call for Action, identifies countries with serious deficiencies in preventing money laundering, terrorist financing, and proliferation financing. Unlike the FATF grey list, these jurisdictions face stronger international scrutiny, with FATF calling for enhanced due diligence and, in severe cases, countermeasures to protect the global financial system.

Why Are Countries Blacklisted by FATF?

Countries are blacklisted when serious weaknesses in their AML/CFT/CPF frameworks expose the international financial system to significant risks. Common reasons include:

• Weak AML regulations: Inadequate laws and safeguards against financial crime.
• Poor regulatory enforcement: Failure to effectively implement AML/CFT requirements.
• Limited financial transparency: Insufficient oversight of suspicious transactions and beneficial ownership.
• Ineffective financial investigations: Weak systems for detecting, investigating, and prosecuting financial crimes.
• Unresolved strategic deficiencies: Failure to address critical compliance gaps requiring stronger international action.

What Happens When a Country Is Blacklisted?

Countries on the FATF blacklist face heightened financial scrutiny and stronger compliance measures. For the high-risk jurisdictions FATF identifies, these consequences may include:

• Enhanced Due Diligence (EDD): Financial institutions must apply additional verification and monitoring measures where required.
• Financial countermeasures: In serious cases, FATF calls for restrictions on certain financial relationships and transactions.
• Increased transaction scrutiny: Cross-border payments and international financial activities may face closer examination.
• Banking challenges: Businesses may experience difficulties establishing or maintaining international banking relationships.
• Higher compliance costs: Additional checks, monitoring, and reporting can increase operational expenses.
• Reputational risks: Blacklisting may discourage international investors and financial partners.

However, FATF blacklisting does not automatically impose comprehensive economic sanctions or prohibit all transactions involving a listed country. Actual restrictions depend on applicable national laws, sanctions regimes, and specific FATF calls for action.

FATF Grey List vs. Black List: Key Differences

Both the FATF grey list and FATF blacklist identify jurisdictions with strategic AML/CFT deficiencies, but they differ in their risk classifications, monitoring requirements, and regulatory responses.

Here are the key differences between these classifications and how they affect high-risk jurisdictions FATF identifies.

Which Countries Are on the FATF Grey List and Black List in 2026? 

The Financial Action Task Force (FATF) updates its country classifications following plenary meetings in February, June, and October. These reviews identify jurisdictions with strategic AML/CFT deficiencies and assess their progress toward compliance. As of the latest verified update on 19 June 2026, the FATF grey list includes 22 jurisdictions, while the FATF blacklist includes three.

FATF Grey List Countries

As of June 2026, the FATF grey list includes 22 jurisdictions under increased monitoring. These countries have committed to addressing weaknesses in their AML/CFT/CPF frameworks through agreed action plans.

FATF Black List Countries

As of June 2026, the FATF blacklist includes three jurisdictions with serious strategic deficiencies in their AML/CFT/CPF systems. These high-risk jurisdictions FATF identifies are subject to calls for enhanced due diligence and, where specified, financial countermeasures.

• North Korea (DPRK)
• Iran
• Myanmar

Recent FATF Grey List Changes

During its June 2026 plenary, FATF added Bosnia and Herzegovina and Iraq to the grey list following assessments of their AML/CFT deficiencies. Meanwhile, Algeria and Namibia were removed after demonstrating significant progress in implementing their FATF action plans. These changes highlight how jurisdictions can enter or exit increased monitoring based on progress in strengthening their financial crime prevention frameworks.

How Does FATF Decide Which Countries to Greylist or Blacklist? 

The Financial Action Task Force (FATF) assesses countries' AML/CFT frameworks to identify weaknesses that could expose the global financial system to financial crime. 

Through evaluations, risk reviews, and ongoing monitoring, FATF determines whether jurisdictions require increased scrutiny or stronger international action.

Step 1: Evaluate National AML/CFT Systems

FATF and its regional partners conduct mutual evaluations to assess how effectively countries prevent money laundering, terrorist financing, and proliferation financing. These assessments examine national laws, regulatory controls, and enforcement capabilities.

Countries are evaluated against the 40 FATF Recommendations and the effectiveness of their AML/CFT systems. The findings help identify jurisdictions that may require further review for inclusion on the FATF grey list or FATF blacklist.

Step 2: Identify Strategic Deficiencies

FATF examines gaps in customer due diligence, beneficial ownership transparency, financial supervision, and suspicious transaction reporting. Weak financial investigations and ineffective enforcement can also indicate serious compliance deficiencies.

These weaknesses help determine whether a jurisdiction poses significant financial crime risks. Countries with unresolved strategic deficiencies may be considered for increased monitoring or stronger international action.

Step 3: Review Country Risks and Commitments

FATF's International Co-operation Review Group (ICRG) and regional review groups assess jurisdictions identified through the review process. They examine strategic deficiencies, progress on reforms, and the country's willingness to address identified weaknesses.

Countries entering increased monitoring make high-level political commitments and agree to specific corrective action plans. These commitments help FATF assess whether jurisdictions can address their deficiencies within established timelines.

Step 4: Determine the Appropriate Classification

FATF determines the appropriate response based on its review procedures, identified deficiencies, and the jurisdiction's progress and commitments. Countries that commit to addressing strategic weaknesses may be placed on the FATF grey list for increased monitoring.

The FATF blacklist identifies jurisdictions with serious strategic deficiencies requiring stronger international action. For these high-risk jurisdictions FATF calls on countries to apply enhanced due diligence and, in the most serious cases, countermeasures.

Step 5: Monitor Progress and Update Listings

FATF regularly reviews whether listed jurisdictions are implementing corrective measures, strengthening regulations, and improving financial crime prevention systems. Countries demonstrating sufficient progress may qualify for removal from increased monitoring.

Following its plenary meetings, generally held in February, June, and October, FATF publishes updated country statements. These updates reflect changes in jurisdictional risk classifications and help financial institutions adjust their AML compliance procedures.

What Are the Consequences of FATF Greylisting and Blacklisting? 

Countries on the FATF grey list or FATF blacklist may face increased financial scrutiny, higher compliance costs, and challenges in international business relationships. These classifications influence how financial institutions assess jurisdictional risks and manage cross-border activities.

Increased Banking and Transaction Scrutiny - Financial institutions may closely examine transactions, customers, and business relationships involving FATF-listed jurisdictions. While greylisting generally leads to risk-based scrutiny, the FATF blacklist triggers calls for enhanced due diligence and, where specified, additional protective measures.

Higher Compliance and Operational Costs - Businesses dealing with high-risk jurisdictions FATF identifies may face higher compliance expenses due to additional identity verification, customer due diligence, transaction monitoring, and regulatory documentation. These requirements can increase operational workloads and slow customer onboarding.

Challenges With International Payments and Investment - Countries on the FATF grey list or blacklist may experience difficulties accessing international banking services, processing cross-border payments, and attracting foreign investment. Financial institutions may reassess correspondent banking relationships or introduce additional checks based on jurisdictional risks.

Reputational and Business Risks - FATF listings can influence how international investors, banks, and business partners perceive a country's financial transparency and regulatory environment. Increased risk concerns may reduce business confidence, delay partnerships, or discourage investment, particularly when serious compliance deficiencies remain unresolved.

Best Practices for Managing FATF Country Risks 

Managing risks associated with the FATF grey list and FATF blacklist requires a proactive, risk-based compliance strategy. Financial institutions and regulated businesses should adopt the following practices to strengthen AML controls and manage exposure to high-risk jurisdictions.

Maintain Updated FATF Country Lists - Regularly review official FATF statements to track changes in greylisted and blacklisted jurisdictions. Update internal country risk classifications, compliance policies, and screening procedures whenever FATF adds or removes countries to ensure accurate risk assessments.

Apply a Risk-Based Approach - Assess jurisdictional exposure alongside customer profiles, business activities, transaction patterns, and delivery channels. Rather than treating every FATF grey list country identically, apply compliance measures proportionate to identified risks and applicable regulatory requirements.

Strengthen KYC and KYB Processes - Implement robust Know Your Customer (KYC) and Know Your Business (KYB) procedures to verify identities, company registration details, directors, and ultimate beneficial owners (UBOs). These checks help identify hidden ownership structures and potential connections to jurisdictions on the FATF blacklist.

Conduct Proportionate Enhanced Due Diligence - Apply enhanced due diligence (EDD) when required by law or justified by assessed risks, particularly for high-risk jurisdictions FATF identifies as subject to a call for action. Additional measures may include source-of-funds verification, closer transaction scrutiny, and senior management approval.

Monitor Customers and Transactions Continuously - Use ongoing AML monitoring to detect suspicious transactions, changes in customer risk profiles, and emerging geographic exposure. Automated alerts and periodic reviews help businesses identify financial crime risks associated with FATF-listed jurisdictions and respond promptly.

Maintain Clear Documentation and Audit Trails - Keep detailed records of customer risk assessments, due diligence checks, transaction investigations, and compliance decisions. Well-maintained audit trails demonstrate how jurisdictional risks were assessed and managed, supporting regulatory examinations and internal compliance reviews.

How Can a Country Be Removed From the FATF Grey List or Black List? 

Countries can be removed from the FATF grey list or FATF blacklist by addressing identified AML/CFT deficiencies and demonstrating effective regulatory reforms. The process involves strengthening financial crime controls, fulfilling FATF requirements, and undergoing formal assessments.

Step 1: Implement Corrective Measures

Countries must strengthen AML/CFT laws, financial supervision, and regulatory enforcement to address weaknesses identified by FATF. This includes improving beneficial ownership transparency, financial investigations, and measures against terrorist financing.

Step 2: Address FATF Action Plans

Jurisdictions on the FATF grey list must complete agreed action plans covering specific compliance deficiencies within established timelines. Countries on the blacklist must address the serious weaknesses and applicable requirements identified by FATF to qualify for reconsideration.

Step 3: Demonstrate Effectiveness

Passing new laws alone is insufficient. Countries must demonstrate that their reforms work in practice through effective supervision, financial crime investigations, enforcement actions, and improved regulatory transparency.

Step 4: Undergo FATF Review

FATF reviews a country's progress and conducts on-site verification before removing it from increased monitoring. For high-risk jurisdictions FATF identifies on its blacklist, removal depends on the applicable review process and FATF's assessment of outstanding deficiencies.

For example, Algeria and Namibia were removed from the FATF grey list in June 2026 after completing their action plans and undergoing successful on-site assessments. Their removals demonstrate how sustained reforms can help countries regain international confidence.

How Do FATF Grey and Black Lists Affect AML Compliance? 

The FATF grey list and FATF blacklist help financial institutions identify geographic financial crime risks and strengthen AML compliance. Businesses use these classifications to guide customer onboarding, risk assessments, due diligence, transaction monitoring, and regulatory reporting.

Customer Due Diligence (CDD)

Customer Due Diligence (CDD) helps businesses verify customer identities, understand their activities, and assess connections to FATF-listed jurisdictions. Strong CDD procedures enable compliance teams to identify potential risks early and apply appropriate controls when onboarding individuals or businesses.

Enhanced Due Diligence (EDD)

Enhanced Due Diligence (EDD) involves additional verification, source-of-funds checks, and closer scrutiny of higher-risk relationships. FATF calls for enhanced due diligence involving jurisdictions on its blacklist, while countries on the FATF grey list generally require risk-based assessments rather than automatic EDD, unless national regulations specify otherwise.

Geographic Risk Assessments

Geographic risk assessments help businesses evaluate exposure to high-risk jurisdictions FATF identifies through customer residence, company incorporation, beneficial ownership, operating locations, and transaction counterparties. These assessments help compliance teams assign appropriate risk ratings and implement proportionate AML controls.

Ongoing AML Screening and Monitoring

Continuous AML screening helps businesses detect emerging risks through sanctions checks, politically exposed person (PEP) screening, adverse media analysis, and transaction monitoring. Regular customer reviews and updated country risk classifications help identify suspicious activities, support regulatory reporting decisions, and maintain effective compliance controls.

Bottom Line 

The FATF grey list identifies countries addressing strategic AML/CFT deficiencies under increased monitoring, while the FATF blacklist highlights jurisdictions requiring stronger international action. These classifications influence banking relationships, financial transactions, and compliance requirements but do not automatically impose universal transaction bans. Businesses dealing with high-risk jurisdictions FATF identifies should follow updated country lists, applicable regulations, and risk-based AML procedures.

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FAQs - FATF Grey List and Black List