30 Oct FATF Grey List Update: October 2024 Plenary
The Financial Action Task Force (FATF) remains at the forefront of efforts to combat global money laundering, terrorist financing, and proliferation financing. Its October 2024 update brings new insights, adding Algeria, Angola, Côte d’Ivoire, and Lebanon to the FATF “grey list.” Countries on this list are under increased monitoring, signifying that they have committed to addressing strategic Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) deficiencies. This update highlights the FATF’s continuing mission to strengthen financial integrity worldwide.
What Does It Mean to Be on the FATF Grey List?
The FATF grey list is a crucial tool for identifying jurisdictions with areas of AML/CTF weakness. Placement on this list signals that the FATF and affiliated regional bodies are actively working with these countries to address and resolve specific deficiencies in their AML/CTF frameworks. Countries on the grey list commit to FATF action plans, often with specified deadlines, to achieve a robust, risk-based approach to financial oversight. The FATF emphasises that this designation should not result in blanket de-risking, such as halting all financial activity with these jurisdictions. Instead, it aims to drive improvement through strategic action.
Increased Monitoring and FATF’s Role
The FATF’s monitoring role is supported by FATF-style regional bodies (FSRBs), such as MENAFATF, GIABA, and MONEYVAL, which ensure regional compliance and facilitate targeted action plans. These bodies collaborate with jurisdictions to enhance financial security and transparency, contributing to each country’s readiness to meet FATF standards and adapt policies accordingly. FATF’s grey list serves as an ongoing incentive for improvement, encouraging nations to enhance financial oversight in sectors prone to money laundering and terrorism financing.
Why This Matters to AML Compliance Professionals
For AML compliance officers, financial institutions, and other stakeholders, the FATF grey list is essential for assessing risk. While FATF does not recommend outright de-risking, enhanced due diligence (EDD) measures are warranted for these jurisdictions. Institutions must align their risk analysis with the FATF guidance, weighing humanitarian exemptions and taking a nuanced approach that upholds financial security without restricting legitimate fund flows, such as charitable donations and remittances.
Recent Additions to FATF’s Grey List and Their Commitments
The FATF grey list update as of October 2024 includes Algeria, Angola, Côte d’Ivoire, and Lebanon. Each of these countries has made substantial commitments to address AML/CTF weaknesses.
- Algeria
Algeria has committed to strengthening AML/CTF through a high-level action plan. Since the mutual evaluation report (MER) was issued in May 2023, Algeria has implemented key AML/CTF reforms, such as increasing money laundering investigations and prosecutions. FATF’s action plan requires Algeria to improve risk-based supervision, especially for higher-risk sectors, and to enhance beneficial ownership information. Other priorities include better reporting for suspicious transactions and enforcing financial sanctions related to terrorism financing. Algeria’s progress will be closely monitored, with FATF’s support, to achieve consistent and effective compliance. - Angola
Angola made a similar commitment to FATF, targeting enhanced risk-based supervision and oversight. The country has improved AML/CTF measures by increasing interagency collaboration and financial intelligence use. Angola’s action plan focuses on bettering understanding of money laundering and terrorism financing risks, particularly in the non-financial banking sectors. In addition, Angola is committed to ensuring authorities have timely access to beneficial ownership information, a core aspect of FATF’s recommendations. The action plan also highlights the need for increased prosecution of money laundering offenses, a critical step in Angola’s path toward FATF compliance. - Côte d’Ivoire
Côte d’Ivoire has shown significant progress in its AML/CTF efforts since the adoption of its MER in June 2023. Recent legislative reforms have strengthened its legal framework, enhancing the capacity of financial intelligence units and establishing protocols for managing seized assets. FATF’s action plan for Côte d’Ivoire includes measures to increase international cooperation in investigating financial crimes, implementing risk-based supervision, and ensuring accurate beneficial ownership records. These actions are geared toward addressing systemic vulnerabilities and improving transparency across the financial sector. - Lebanon
Lebanon faces unique social and economic challenges, yet it remains committed to AML/CTF reforms. FATF’s action plan for Lebanon includes specific measures to improve beneficial ownership transparency, expand financial intelligence sharing, and strengthen prosecution efforts. Despite obstacles, Lebanon has prioritised regulating politically exposed persons (PEPs) and curbing unlicensed financial activities. FATF’s monitoring will ensure Lebanon adheres to its action plan, helping mitigate financial crime risks within its borders.
Key Requirements and Focus Areas for Grey-Listed Jurisdictions
Beneficial Ownership Transparency
Beneficial ownership transparency remains a critical component for countries under FATF monitoring. This transparency ensures that the real owners of legal entities are identifiable, a step crucial in tracing illicit funds and combatting tax evasion. FATF’s grey list requirements encourage countries to create centralised registers or comparable mechanisms to facilitate this transparency, which is essential for international cooperation and financial stability.
Risk-Based Supervision
Risk-based supervision is fundamental in FATF’s guidance for grey-listed countries. A risk-based approach involves prioritising oversight for sectors deemed high-risk, such as DNFBPs, including real estate, legal services, and virtual asset providers. For example, both Algeria and Côte d’Ivoire are required to refine their risk-based supervision practices to align with FATF recommendations. This approach ensures resources are focused on areas most vulnerable to financial crime.
Suspicious Transaction Reporting
Suspicious transaction reporting (STR) is another core element in FATF’s action plans. Grey-listed countries are advised to establish and refine frameworks that mandate reporting suspicious transactions to the financial intelligence unit (FIU). FIUs are then responsible for analysing STRs and working with law enforcement to investigate potential financial crimes. STR enhancements are central to Algeria’s, Côte d’Ivoire’s, and Lebanon’s action plans, among others.
Counter-Terrorism Financing (CTF) Sanctions
Implementing targeted financial sanctions, particularly those related to terrorism financing, is a mandatory action for all grey-listed jurisdictions. Sanctions ensure that assets are frozen when linked to suspected terrorist activities. FATF’s guidance encourages a robust legal framework for sanction implementation, especially at non-bank financial institutions and designated high-risk entities.
Enhanced Coordination Among Jurisdictions
International cooperation is integral to FATF compliance, fostering shared intelligence and mutual support. Côte d’Ivoire’s action plan, for instance, emphasises enhancing cross-border cooperation in investigations and prosecutions. Similarly, Angola is working to strengthen its legal mechanisms for cooperating with foreign financial intelligence units.
FATF’s Stance on De-Risking and Humanitarian Exemptions
The FATF underscores that grey-listed jurisdictions should not automatically be subject to de-risking policies, which can disrupt legitimate humanitarian, non-profit, and financial activities. Instead, FATF encourages a nuanced approach, calling on member countries to maintain financial relationships with these jurisdictions while applying risk-based measures.
Humanitarian Exemptions
The FATF supports exemptions for humanitarian activities, ensuring that funds for essential non-profit services, including disaster relief and medical aid, are not interrupted. FATF’s alignment with UN Security Council Resolution 2664 supports humanitarian exemptions to asset-freeze measures, maintaining essential funding for legitimate non-profit organisations.
Guidelines for AML Compliance Officers
AML compliance officers play a pivotal role in adapting FATF guidance within financial institutions. For grey-listed jurisdictions, compliance officers should emphasise risk-based assessments, applying enhanced due diligence while respecting FATF’s humanitarian exemptions. This approach balances regulatory obligations with ethical considerations, supporting global anti-crime efforts without hindering vital services.
Moving Forward: Expectations for Jurisdictions Under FATF Monitoring
FATF’s action plans provide grey-listed countries with a roadmap to strengthen their financial sectors. As these nations progress toward compliance, FATF will continue monitoring their efforts, ensuring they adhere to agreed timelines and meet their commitments. The ongoing support from FATF-style regional bodies, such as GIABA in West Africa and MENAFATF in the Middle East, is crucial for sustainable improvement.
Financial institutions, corporate compliance teams, and AML specialists must stay informed of FATF grey list updates. Implementing effective AML programs aligned with FATF standards is critical for maintaining global financial stability, especially in high-risk sectors. Compliance officers should remain proactive, adjusting their strategies to reflect FATF’s evolving standards and updates.
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