The Financial Action Task Force (FATF), the global standard-setter for combating money laundering, terrorist financing, and proliferation financing, has expanded its list of jurisdictions under increased monitoring, commonly known as the “grey list,” reinforcing international efforts to strengthen financial crime controls across vulnerable jurisdictions.
In its latest review, the FATF announced that Bosnia and Herzegovina and Iraq have been added to the grey list after identifying strategic deficiencies in their anti-money laundering and counter-terrorist financing (AML/CFT) frameworks. The decision places both countries under enhanced international scrutiny and requires them to implement agreed reforms within specified timelines.
The grey list serves as a mechanism through which the FATF monitors countries that have committed to addressing weaknesses in their financial crime prevention regimes. Inclusion on the list does not result in sanctions or mandatory enhanced due diligence measures. Instead, it signals to financial institutions, regulators, and businesses that a jurisdiction presents elevated risks and should be assessed through a risk-based approach.
According to the FATF, jurisdictions under increased monitoring are actively working with the organization and regional bodies to strengthen controls against money laundering, terrorist financing, and proliferation financing. The watchdog emphasized that countries should avoid blanket de-risking measures that could disrupt legitimate business activities, humanitarian assistance, remittances, or the work of non-profit organizations.
The latest review covered progress made by a broad range of jurisdictions since February 2026. Countries whose efforts were assessed include Algeria, Angola, Bolivia, Bulgaria, Cameroon, Côte d’Ivoire, the Democratic Republic of the Congo, Haiti, Kenya, Lao PDR, Lebanon, Monaco, Namibia, Nepal, South Sudan, Syria, Venezuela, Vietnam, the British Virgin Islands, and Yemen. Kuwait and Papua New Guinea elected to defer reporting, meaning previously published assessments remain in effect.
The FATF noted that jurisdictions on the grey list have demonstrated political commitment to implementing reforms but continue to face deficiencies in areas such as beneficial ownership transparency, suspicious transaction reporting, risk-based supervision, financial intelligence utilization, asset recovery, sanctions implementation, and the investigation and prosecution of money laundering and terrorist financing offenses.
The addition of Bosnia and Herzegovina reflects concerns over the country’s ability to prevent criminals and terrorist actors from exploiting its financial system. FATF officials indicated that stronger supervision of the banking sector and more effective implementation of AML/CFT controls will be necessary for the country to exit increased monitoring.
Iraq’s inclusion highlights concerns regarding cash-intensive risks, money laundering investigations, terrorist financing enforcement, and the use of financial intelligence. The development comes at a critical time for Iraq as authorities seek to attract foreign investment and strengthen economic governance while pursuing anti-corruption reforms.
The FATF’s monitoring process has become one of the most influential mechanisms in global financial regulation. Countries placed on the grey list often face increased scrutiny from correspondent banks, investors, multinational corporations, and financial institutions. While grey-listing does not impose direct economic penalties, it can increase compliance costs, affect investor confidence, and complicate cross-border financial relationships.
At the same time, the FATF highlighted the progress made by several jurisdictions in implementing reforms. Countries that successfully complete their action plans and demonstrate sustained effectiveness may be removed from the list following an on-site verification process. Such removals are generally viewed as significant milestones that improve a country’s international financial standing and reduce perceived compliance risks.
The organization’s latest review underscores the continuing global focus on financial integrity amid evolving threats from organized crime, corruption, sanctions evasion, terrorist financing, and proliferation financing. As financial systems become increasingly interconnected, regulators worldwide are paying closer attention to FATF assessments when evaluating jurisdictional risk and determining appropriate compliance measures.
With more than 200 jurisdictions participating in the FATF’s global network through regional bodies and member states, the grey-list process remains a central tool in driving AML/CFT reforms. The watchdog has reiterated that its objective is not to isolate countries but to encourage meaningful improvements that strengthen the resilience and transparency of the international financial system.
Financial institutions and compliance professionals are expected to closely monitor developments in the coming months as the affected jurisdictions work to implement their action plans and demonstrate progress toward meeting international standards.
By FCCT Editorial Team
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