FATF Lists: Why They Matter

In the connected global world of 2020s, money crosses oceans at the speed of a screen tap. This lighting speed enables merchants and business worldwide to transact and deal instantly –  delivering goods, launching new projects, and providing services all way across the globe. However, on the other side, money launderers, sanctions-dodgers, and extremist financiers exploit these opportunities to fund their illicit activities. And someone has to combat it.

The Financial Action Task Force (FATF), created by the G7, fortifies global standards on anti-money laundering and counter-terrorist financing. It sends expert teams to assess each country and, following such assessments, publishes two colour-coded lists that function like traffic lights for the rest of the financial market. The naming approach is blunt on purpose: 

• Grey List (increased monitoring) should be viewed as a wake-up call for a labeled jurisdiction;
• Black List is a grave call for action for any developed nation. 

Let’s take a look at how these lists work and why they may matter for your project.

How do countries end up on the lists?

A jurisdiction can be included into a FATF list for failing to meet standards concerning anti-money laundering and counter-terrorist financing compliance. Indicators of such non-compliance may include:

• Money-laundering or terror-financing crimes not fully criminalised or enforced.
• Regulators lacking staff, modern tech or political cover to inspect and penalise banks.
• Overburdened financial-intelligence units — suspicious activity reports not being processed.
• Non-transparent corporate structures within the jurisdictions (no UBO disclosure).
• Systemic corruption or conflict of interest occurring.

Depending on the gravity of the non-compliance, the FATF will determine the appropriate list for it.

Grey List: A wake-up call

A jurisdiction enters the grey zone when FATF reviewers uncover strategic deficiencies, which can be ‘fixed’ by following a tailor-made compliance roadmap prepared by the Task Force itself. From that day on, the country lives under a magnifying glass of surveillance. Transfers to such a jurisdiction are still possible, yet banks, financial institutions, and payment providers will treat every deal with a Grey List jurisdiction as a higher risk. For instance, additional documents may be required by the compliance departments of banks, and an extended review period can be applied. 

As of now, 25 countries – including Cameroon, Nepal, and Bulgaria – are on the Grey List.

Black List: A call for action

Black-listing is reserved for governments that stonewall, backslide, or pose such an extreme risk that postponement would let billions in illicit funds slip to the global financial system. Once flagged, the FATF issues a global “call for action.” After such designation, the following usually happens:

• Banks terminate correspondent relationships — the accounts that enable cross-border wires, trade settlements and remittances — thereby cutting domestic institutions off from ready access to dollars, euros and sterling;
• At the same time, SWIFT designates the country’s BICs as high-risk, so payment messages are either automatically blocked or subjected to to time-demanding manual review;
• This combination prevents importers from paying suppliers, delays exporters’ receivables, disrupts migrant remittances, and obliges the central bank to draw down reserves to keep essential transactions flowing.

It is possible for a country to be taken off the list, however, reinstatement is not achieved by new statutes alone. Authorities must provide hard evidence of enforcement, such as successful prosecutions, assets freezes, and credible, transparent audits, before correspondent lines and full SWIFT functionality are restored.

As of today, only Iran, North Korea, and Myanmar are on the FATF Black List.

How does FATF listing affect a country?

Publication of a new FATF listing is automatically integrated into compliance and screening systems used by financial institutions. From that moment, the subsequent measures set out below take effect.

• Enhanced Due Diligence (EDD). Any transfer involving a grey- or black-listed jurisdiction pulls you into full EDD: documentation of the source of funds, escalation to senior management, and ongoing scrutiny of the relationship.
• Sanctions and counter-measures may freeze or block funds outright. The FATF calls on members to apply “effective counter-measures” — ranging from asset freezes to closure of correspondent lines — against high-risk countries, such as DPRK, Iran, and (since 2022) Myanmar. This means that wires can be halted mid-chain with no recourse.
• Correspondent-bank “de-risking” inflates cost and delays. Although the FATF discourages blanket cut-offs, many global banks price the risk punitively or exit high-risk corridors altogether, driving up FX spreads, adding manual reviews and causing “payment rejected” events that choke liquidity.
• Reputational contagion undermines market confidence. Dealings with listed jurisdictions may deter investors, attract unwanted attention from the regulators, and chill cross-border partnerships.
• Direct civil and criminal exposure for facilitating ML/TF. FATF recommendations imply personal and corporate liability, asset forfeiture and confiscation powers. Executives who facilitate listed-country flows risk prosecution, heavy fines, and licence loss.

Who must pay attention?

Practically, any company that transfers money worldwide should be aware of FATF lists. However, particular attention should be paid by:

• Retail and corporate banks, which embed the FATF lists into onboarding tools and payment filters. Ignoring an update can risk licences and lead to nine-figure fines.
• Fintech apps, which ride on sponsor banks. A single unscreened transfer to a black-listed country can trigger overreaching consequences, including platform-wide account closures overnight.
• Crypto exchanges, brokers, and wallet firms, which rely on fiat rails and market-maker credit. Partners may walk away if an FATF risk is mishandled.
• Payment gateways, forex platforms and remittance companies, which face frozen funds and reputational damage for a single rogue route.
• Exporters and importers, who are dependent on timeliness of the payment execution and remittance of funds.

How to mitigate risks

• Check the traffic lights before you hit “send”.

  Every international payment, contract, or new customer should get a two-second glance against the latest FATF Grey and Black Lists. Identifying a problem upfront can save you and your project weeks of frozen funds.

• Upgrade the paperwork when risk goes up.

  If the money trail touches a listed country, shift into an “extra proof” mode: be ready to undergo an EDD to facilitate the transfer, keep documents, such as IDs, original copies of agreements and proof-of-address, on dispatch.

• Keep a spare payment lane open.

  Don’t rely on a single bank or corridor for critical transfers. Having an alternate route in a lower-risk hub keeps salaries, suppliers, and customers paid. Consider setting up accounts in multiple financial institutions with diverse types of licences.

• Build a smart pause button into your systems.

  Fintech start-ups should consider automating freezing or rerouting of any transaction the moment a jurisdiction’s status flips. Machines can stop a wire in milliseconds; humans can review transactions at their own pace. It’s the cheapest insurance policy you’ll ever install.

• Know who really owns the other side.

  If a supplier or client can’t — or won’t — name their UBO, consider refusing to work with them. Hidden ownership is the fastest shortcut to Grey/Black List headaches, reputational damage, and potential liability for moving dirty money. Transparency up front keeps the brand (and your officers) out of the sight of your home regulator.

For a free, confidential consultation write to support@prometheus.partners and let us keep your expansion agile, secure, and fully compliant.