What is the FATF Grey List?

The Financial Action Task Force (FATF) is an intergovernmental organisation established in 1989 that monitors global money laundering and terrorist financing trends. FATF collaborates with its member states and regional organisations to develop a legal, regulatory, and operational framework for combating these threats.

The FATF 40 recommendations are a set of globally recognised standards that act as guidance to countries for the prevention of money laundering, terrorist financing, and other illicit financial activity. Initially, FATF was established to combat money laundering. More recently, its scope has expanded to the prevention of funding of weapons of mass destruction, corruption, and terrorist financing. Over 200 jurisdictions worldwide have committed to the FATF recommendations.

As part of its ongoing assessments of compliance with the recommendations, FATF maintains two types of lists. The Black List, officially known as ‘High-Risk Jurisdictions subject to a Call for Action’ – that is a list of jurisdictions considered noncooperative, and the Grey List, officially known as ‘Jurisdictions under increased monitoring’. The Grey List includes jurisdictions with strategic deficiencies within their regimes to counter money laundering, terrorist financing, and proliferation financing, and must work with FATF to address these deficiencies within an agreed timeframe. The assessment of these countries is done directly with FATF, or through FATFs regional bodies. The Grey List is updated regularly as new countries are added, and countries are removed when they satisfactorily complete their action plans.

Given the increased risk of dealing with/in grey listed countries, Financial Institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs) should be aware of their obligations and must ensure to have a suitable risk based approach when dealing with customers in the Grey Listed countries. FIs and DNFBPs must ensure to have adequate policies and procedures that include screening facilities during customer onboarding, throughout the business relationship, and during the monitoring of transactions on a frequent basis.

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