FATF Updates Grey List & Reinforces Countermeasures on Iran

The Financial Action Task Force (FATF) has updated its global lists of jurisdictions with strategic deficiencies in anti-money laundering, combating the financing of terrorism and counter-proliferation finance (AML/CFT/CPF), prompting the U.S Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) to alert financial institutions to the changes.

Following its February plenary meeting, FATF added Kuwait and Papua New Guinea to its list of jurisdictions under increased monitoring, often referred to as the “grey list”. Countries on this list have identified weaknesses in their AML/CFT/CPF frameworks but have committed to work with FATF to address those deficiencies within agreed timelines.

FinCEN advised U.S financial institutions to take the updated FATF assessments into account when reviewing risk-based compliance programmes, particularly those relating to correspondent banking and relationships with foreign financial institutions (FFIs). Under the Bank Secrecy Act (BSA), firms must ensure that their due diligence frameworks are capable of detecting and reporting suspicious activity linked to correspondent accounts.

The FATF’s list of high-risk jurisdictions subject to a call for action remains unchanged. Iran, the Democratic People’s Republic of Korea (DPRK) and Burma continue to face enhanced scrutiny due to significant deficiencies in their AML/CFT regimes. FATF reiterated its call for jurisdictions to apply effective countermeasures against Iran, including restrictions on correspondent banking relationships, limits on financial transactions and prohibitions on establishing branches or representative offices linked to Iranian financial institutions or virtual asset service providers.

The organisation also reaffirmed that jurisdictions should maintain strong countermeasures against the DPRK, while Burma remains subject to enhanced due diligence measures rather than full countermeasures. Financial institutions engaging with entities connected to these jurisdictions must therefore apply heightened compliance controls and monitoring.

FinCEN further reminded firms that money services businesses (MSBs) must maintain adequate monitoring of foreign agents and counterparties as part of their AML programme obligations. These controls are intended to address risks associated with cross-border money laundering and terrorism financing.

The agency also stressed that risk-based compliance should not lead to indiscriminate de-risking of entire customer segments or jurisdictions. Instead, institutions should apply proportionate due diligence while maintaining access to legitimate financial services.

Financial institutions were also encouraged to remain aware of broader sanctions frameworks, including United Nations Security Council Resolutions (UNSCRs) and U.S sanctions administered by the Office of Foreign Assets Control (OFAC), which may impose additional restrictions beyond FATF standards.

The latest FATF updates form part of its ongoing global monitoring process designed to strengthen financial system integrity and ensure jurisdictions address systemic weaknesses in AML, counter-terrorism financing and proliferation financing controls.

Read the press release here.