The FATF Grey List October 2025

Analysis of Jurisdictions Under Increased Monitoring

Executive Summary

The Financial Action Task Force (FATF) has released its updated list of Jurisdictions under Increased Monitoring following the October 2025 Plenary.
This report analyzes the latest developments and their implications for global Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) efforts.

The findings reveal a dynamic and evolving global landscape in the fight against money laundering, terrorist financing, and proliferation financing. A pivotal development from this plenary is the removal of four African nations—Burkina Faso, Mozambique, Nigeria, and South Africa—from the so-called "grey list," signaling significant regional progress in strengthening Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regimes through sustained political commitment and the achievement of measurable outcomes. Despite these successes, 19 jurisdictions remain under increased monitoring, each at a different stage of implementing its respective action plan. This list includes recent additions from 2024 and 2025, such as Monaco, Namibia, Nepal, and the British Virgin Islands (BVI), as well as long-standing cases like Syria and Yemen, whose progress is complicated by geopolitical instability. The analysis of these jurisdictions reveals persistent global challenges, most notably in the effective implementation of risk-based supervision, ensuring the transparency of beneficial ownership information, and demonstrating a consistent track record of investigating and prosecuting complex financial crimes. The case of the BVI, in particular, underscores the FATF's definitive shift in focus from mere technical compliance (having laws on the books) to proven effectiveness (achieving tangible results). The jurisdiction was grey-listed despite a high degree of technical compliance, a clear signal to international financial centers worldwide that demonstrable enforcement is now the paramount standard. Furthermore, a trend of "re-listing" jurisdictions previously deemed compliant highlights that adherence to FATF standards is a continuous process of sustainable reform rather than a one-time achievement. For international financial institutions and businesses, the October 2025 list reinforces the critical need for robust, dynamic risk and compliance frameworks. Although the FATF does not officially call for enhanced due diligence (EDD) on grey-listed jurisdictions, the market's risk-based reaction makes heightened scrutiny a de facto requirement. This report details the strategic deficiencies of each monitored jurisdiction, analyzes the economic and reputational impacts of grey-listing, and provides forward-looking analysis on the future of global AML/CFT enforcement, which will be increasingly shaped by technological innovation and an unwavering focus on measurable results.

Section 1: The Global Framework for Financial Integrity

To comprehend the significance of the FATF's October 2025 update, it is essential to first understand the architecture of the global AML/CFT/CPF regime, which is designed, led, and monitored by the Financial Action Task Force. This section outlines the FATF's mandate, the foundational principles of its international standards, and its unique role in the international system.

1.1 The Financial Action Task Force (FATF): Mandate, Mission, and Global Role

The Financial Action Task Force (FATF), also known by its French name Groupe d'action financière (GAFI), is the global intergovernmental watchdog for money laundering and terrorist financing.
It was established by the G7 Summit in Paris in 1989 in response to mounting concerns about the threat money laundering posed to the integrity of the international banking system. The FATF's core mission is to set international standards and promote the effective implementation of legal, regulatory, and operational measures to combat these and other related threats to the global financial system.

The FATF's mandate has evolved significantly since its inception. Initially charged with examining money laundering techniques and developing countermeasures, its mission was critically expanded after the terrorist attacks of September 11, 2001, to incorporate the fight against the financing of terrorism (CFT).
More recently, its scope has broadened further to include combating the financing of the proliferation of weapons of mass destruction (CPF), reflecting the dynamic nature of global security threats.
The FATF's overarching goal is to ensure that national authorities can effectively pursue illicit funds linked to a wide range of crimes, including drug trafficking, corruption, cyber fraud, and the illicit arms trade.

As a policy-making body, the FATF operates through a global network to generate the necessary political will for national legislative and regulatory reforms. It comprises 40 members, including the world's major financial centers and two regional organizations — the European Commission and the Gulf Cooperation Council.
To ensure its standards are implemented globally, the FATF works in concert with a network of nine FATF-Style Regional Bodies (FSRBs), extending its reach to over 200 countries and jurisdictions that have committed to the FATF standards.
The organization's primary decision-making body is the FATF Plenary, which convenes three times a year to review progress, adopt mutual evaluation reports, identify high-risk jurisdictions, and update policies and guidance.

“The FATF’s strength lies not in enforcement powers, but in the economic and reputational influence of its evaluations.”

The power of the FATF is unique in international relations. It does not operate under a formal international treaty, and its recommendations are not legally binding in the same way as a UN Security Council resolution.
Instead, its authority is derived from the strong political commitment of its members and the profound economic and reputational consequences that can result from non-compliance.
A poor evaluation by the FATF can adversely impact a country's trade, foreign investment, and access to international aid and capital markets.
This ability to influence a nation's position within the global economy gives the FATF a powerful quasi-enforcement capability, transforming it from a technical standard-setter into a pivotal actor in global governance and security.

1.2 The FATF 40 Recommendations: The International Standard for AML/CFT/CPF

The cornerstone of the FATF's work is its set of 40 Recommendations, which provide a comprehensive and consistent framework of measures for countries to implement in their fight against illicit finance.
First issued in 1990 and subsequently revised to address evolving threats like terrorist financing and new technologies, these Recommendations are recognized as the international standard for AML/CFT/CPF.
The standards are designed to be universal, allowing countries a degree of flexibility in their implementation according to their specific legal systems and constitutional frameworks.

Section 2: Demystifying the FATF Grey List

The FATF's most visible and impactful tool for driving global compliance is its public identification of jurisdictions with weaknesses in their AML/CFT regimes.
This process involves two distinct lists — often referred to as the "grey list" and the "black list."
Understanding the mechanics, purpose, and consequences of the grey list is crucial for interpreting the October 2025 update.

2.1 Defining "Increased Monitoring": Process, Purpose, and Consequences

The term "grey list" is the common shorthand for the FATF's official list of "Jurisdictions under Increased Monitoring." According to the FATF, these are jurisdictions actively working with the organization to address strategic deficiencies identified during their mutual evaluation process.

The process of being placed on the grey list is not arbitrary. It typically follows a peer-review assessment, known as a Mutual Evaluation Report (MER), which reveals significant shortcomings in a country's framework. These deficiencies can relate to "technical compliance" (the laws and regulations in place) or, increasingly, "effectiveness" (the demonstrable results of the system). Upon identification, the jurisdiction makes a high-level political commitment to implement a detailed Action Plan, jointly developed with the FATF, to resolve these deficiencies within agreed-upon timeframes. While on the list, the country's progress is closely monitored by the FATF and its relevant FSRB through regular reporting, culminating in a potential on-site visit to verify that reforms are substantial and sustainable before a de-listing can occur. Officially, the FATF's position on the consequences of grey-listing is carefully calibrated. The organization explicitly states that it "does not call for the application of enhanced due diligence measures" to be applied to these jurisdictions. It emphasizes that its standards call for a risk-based approach, not the wholesale "de-risking" or cutting off of entire classes of customers, which can have damaging effects on legitimate commerce and disrupt crucial flows of humanitarian aid and family remittances. However, there is a significant and undeniable disconnect between this official guidance and the practical reaction of the global financial market. The very principles of the risk-based approach, which the FATF champions, compel financial institutions to reassess their risk exposure to a country publicly identified as having "strategic deficiencies." Logically, a jurisdiction with such weaknesses presents a higher risk profile. Consequently, despite the FATF's cautionary language, global banks, payment processors, and investors almost invariably apply a higher level of scrutiny and due diligence to transactions and relationships connected to grey-listed countries. This market-driven response, a direct consequence of the FATF's own risk-based doctrine, is what gives the grey list its potent economic and political force, operating as a powerful market signal that triggers consequences far beyond the FATF's direct control.

2.2 The Grey List vs. The Black List: A Critical Distinction

We must distinguish the grey list from the FATF's more severe "black list." The two lists serve different purposes and carry vastly different implications.

• The Grey List (Jurisdictions under Increased Monitoring): This list is fundamentally a monitoring and remediation tool. It features jurisdictions that have acknowledged their AML/CFT deficiencies and have formally committed to a cooperative process with the FATF to resolve them. Inclusion on this list signifies a collaborative effort toward compliance.

• The Black List (High-Risk Jurisdictions subject to a Call for Action): This list is a punitive measure reserved for a small number of jurisdictions with "serious strategic deficiencies" that are deemed uncooperative or are failing to make sufficient progress in addressing their issues. For countries on this list—which as of October 2025 includes the Democratic People's Republic of Korea (DPRK), Iran, and Myanmar—the FATF issues a "call for action". This urges all member states and jurisdictions to apply enhanced due diligence and, in the most severe cases, to implement countermeasures to protect the international financial system from the ongoing risks posed by that jurisdiction.

Section 3: The State of the Grey List: October 2025 Plenary Update

The FATF Plenary in October 2025 resulted in significant changes to the list of Jurisdictions under Increased Monitoring, reflecting both commendable progress in some nations and persistent challenges in others. This section provides a clear overview of the current state of the grey list.

3.1 Key Developments: Jurisdictions Exiting and Entering Increased Monitoring

The most notable outcome of the October 2025 meeting was the removal of four African countries from the grey list, a testament to their successful implementation of their respective action plans.

• Jurisdictions Removed: Burkina Faso, Mozambique, Nigeria, and South Africa are no longer subject to increased monitoring by the FATF. These de-listings followed successful on-site visits that confirmed the sustainability of the reforms undertaken by each country to strengthen their AML/CFT/CPF regimes.
• Jurisdictions Added/Remaining: No new jurisdictions were added to the grey list during this plenary session. The list now comprises 19 jurisdictions that remain under increased monitoring. During the plenary, the FATF reviewed the progress of Algeria, Angola, Bulgaria, Cameroon, Côte d'Ivoire, the Democratic Republic of the Congo, Kenya, Lao PDR, Monaco, Namibia, Nepal, South Sudan, Syria, Venezuela, and Vietnam. Five other jurisdictions—Bolivia, Haiti, Lebanon, the Virgin Islands (UK), and Yemen—chose to defer their reporting; consequently, their status remains unchanged from previous FATF statements.

Section 4: In-Depth Jurisdictional Reviews

This section provides a detailed analysis of each of the jurisdictions remaining on the FATF's increased monitoring list. Each review covers the jurisdiction's history with the FATF, the specific strategic deficiencies identified in its action plan, and an assessment of its progress as of the October 2025 Plenary.

4.1 Algeria

Algeria was added to the grey list in October 2024 and made a high-level political commitment to work with the FATF and the Middle East and North Africa Financial Action Task Force (MENAFATF) to strengthen its AML/CFT regime. Its action plan is centered on two key areas: (1) improving risk-based supervision, particularly for higher-risk sectors, through enhanced inspections and the application of effective, proportionate, and dissuasive sanctions; and (2) developing an effective legal and operational framework for ensuring access to adequate, accurate, and up-to-date basic and beneficial ownership information. As of the October 2025 review, the FATF noted that Algeria has taken "significant steps" towards improving its regime, with progress on some action items occurring ahead of schedule. These early achievements include the adoption of new supervision procedures, risk assessments, and guidelines, as well as the establishment of a foundational legal framework for beneficial ownership.

4.2 Angola

Angola was also placed under increased monitoring in October 2024, committing to work with the FATF and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). The jurisdiction's action plan focuses on three primary deficiencies: (1) enhancing its national understanding of money laundering and terrorist financing (ML/TF) risks; (2) improving risk-based supervision of both financial and non-financial entities, including DNFBPs; and (3) ensuring that competent authorities have adequate, accurate, and timely access to beneficial ownership information. The October 2025 statement confirms that Angola is actively working with the FATF to implement this action plan.

4.3 Bolivia

Bolivia was added to the grey list in June 2025, making a high-level political commitment to work with the FATF and the Financial Action Task Force of Latin America (GAFILAT).15 Its action plan is designed to address deficiencies in its investigative and supervisory frameworks, including: (1) ensuring that relevant special investigative techniques can be utilized for ML investigations; (2) implementing risk-based supervision for high-risk DNFBPs such as real estate agents, lawyers, accountants, and dealers in precious metals and stones (DPMS); and (3) ensuring that beneficial ownership information is adequate, accurate, and accessible in a timely manner. For the October 2025 Plenary, Bolivia chose to defer reporting on its progress. The FATF's previous statement from June 2025, issued at the time of its listing, had acknowledged that Bolivia had already made significant progress on the recommended actions from its December 2023 Mutual Evaluation Report (MER), including enhancing its ML/TF risk understanding and strengthening the production and dissemination of financial intelligence.

4.4 Bulgaria

Bulgaria has been under increased monitoring since October 2023, working with the FATF and the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL). Its action plan is focused on improving the effectiveness of its enforcement outcomes, specifically by: (1) addressing remaining technical compliance deficiencies related to the confiscation of criminal assets; and (2) improving the investigation and prosecution of different types of money laundering in a manner consistent with the country's risk profile. In its October 2025 statement, the FATF noted that while Bulgaria has continued to make progress across its action plan, all agreed-upon deadlines have now expired and significant work remains. The FATF encouraged Bulgaria to build on its recent progress and expedite the implementation of its action plan, with a particular emphasis on its efforts to investigate and prosecute money laundering more effectively.

4.5 Cameroon

Cameroon was placed on the grey list in February 2023 and is working with the FATF and the Action Group against Money Laundering in Central Africa (GABAC). Its action plan addresses a broad range of deficiencies, including the need to enhance its national understanding of ML/TF risks, improve international cooperation, strengthen risk-based supervision, ensure transparency of beneficial ownership, and increase the effectiveness of its FIU and law enforcement agencies in investigating financial crimes. The October 2025 update confirms that Cameroon is continuing to make progress on implementing its action plan.

4.6 Côte d'Ivoire

Côte d'Ivoire was added to the grey list in October 2024, committing to work with the FATF and the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA). The core elements of its action plan include: (1) improving the implementation of risk-based supervision for both financial institutions and DNFBPs; and (2) enhancing the use of financial intelligence by law enforcement authorities and improving the quality of disseminations from its FIU. Since its listing, Côte d'Ivoire has already taken steps to improve its AML/CFT regime, notably by enhancing its use of international cooperation in ML/TF investigations and prosecutions.

4.7 Democratic Republic of the Congo (DRC)

The DRC has been under increased monitoring since October 2022. Its action plan requires it to: (1) finalize and implement a risk-based supervision plan for its financial sector; (2) build capacity to identify and investigate TF activities in line with its risk profile; and (3) demonstrate the effective implementation of targeted financial sanctions related to both terrorist financing and proliferation financing. In its October 2025 statement, the FATF acknowledged that the DRC has continued to make progress across its action plan. However, a critical issue is that all of its agreed-upon deadlines have now expired, and substantial work remains to be completed. The FATF has strongly encouraged the DRC to continue implementing its action plan to address the remaining strategic deficiencies as soon as possible.

4.8 Haiti

Haiti has been on the grey list since June 2021, working with the FATF and the Caribbean Financial Action Task Force (CFATF). Its action plan addresses systemic deficiencies across its AML/CFT framework, including the need to complete and disseminate its ML/TF risk assessment, implement risk-based supervision, address legal and practical obstacles to accessing beneficial ownership information, and improve the quality of financial intelligence to support investigations. Haiti chose to defer reporting for the October 2025 Plenary. The previous statement from June 2025 noted that Haiti had taken some steps towards improvement, including the implementation of risk-based AML/CFT supervision for all financial institutions. Progress is likely hampered by the severe political and social instability in the country.

4.9 Kenya

Kenya was added to the grey list in February 2024, marking its return to the monitoring process. The country had previously been removed from the list in June 2. after demonstrating significant progress in improving its AML/CFT regime at that time. This re-listing points to either a degradation of its previous framework or the identification of new deficiencies under the FATF's more stringent, effectiveness-focused evaluation standards. The current action plan requires Kenya to work with the FATF and ESAAMLG to develop and implement a comprehensive AML/CFT framework to address its identified deficiencies. The October 2025 update confirms that Kenya is actively working on its action plan.

4.11 Monaco

Monaco was added to the grey list in June 2024, a significant development for a major European financial center. Its initial MER, adopted in December 2022, found that while technically compliant in many areas, major improvements were needed in the effectiveness of its supervision, ML investigations, and confiscation of criminal proceeds. Monaco's action plan therefore focuses on demonstrating results, requiring it to: (1) enhance the application of sanctions for AML/CFT breaches; (2) strengthen the timeliness of suspicious transaction reporting (STRs); and (3) apply effective, dissuasive, and proportionate sanctions for money laundering convictions. At the October 2025 Plenary, the FATF recognized Monaco's "significant improvements," noting that the actions taken "go beyond those required under the current review cycle." This rare commendation was based on tangible progress, including a marked increase in outbound requests for international cooperation to seize criminal assets abroad and the allocation of more human and technical resources to its FIU and Office of the Public Prosecutor.

4.12 Namibia

Namibia returned to the grey list in February 2024, having previously been removed from the monitoring process in February 2015. The re-listing was driven by concerns over the effective implementation of its AML/CFT standards. Its 2022 MER had identified weaknesses, including an underdeveloped understanding of TF risks and a low number of prosecutions and convictions.49 The current action plan requires Namibia to work with ESAAMLG to strengthen risk-based supervision, enhance the human and resource capacities of competent authorities, and ensure timely access to accurate beneficial ownership information.50 The October 2025 FATF statement confirms that Namibia is working to implement its action plan, with technical assistance being provided by the European Union, particularly on the complex issue of beneficial ownership transparency.

4.13 Nepal

Nepal was re-added to the grey list in February 2025, having previously been de-listed in June 2.. The re-entry was prompted by the identification of significant regulatory weaknesses in the enforcement, investigation, and prosecution of financial crimes, as well as inadequate regulation of high-risk sectors such as cooperatives and real estate.51 Nepal's action plan, which it is implementing with the Asia/Pacific Group on Money Laundering (APG), requires it to: (1) improve its understanding of ML/TF risks; (2) implement effective risk-based supervision of high-risk sectors; (3) demonstrate an increase in ML investigations and prosecutions; and (4) demonstrate measures to identify, trace, and confiscate the proceeds of crime. As of October 2025, the FATF notes that Nepal has taken "some steps" towards improving its regime since making its high-level political commitment.

4.14 South Sudan

South Sudan has been on the grey list since June 2021. It is working with ESAAMLG to address fundamental deficiencies in its financial crime framework. Its action plan requires the implementation of a comprehensive AML/CFT regime, addressing foundational elements of the FATF standards. The October 2025 update confirms that South Sudan continues to work on implementing its action plan.

4.15 Syria

Syria is one of the longest-standing jurisdictions under FATF monitoring, having been on a monitoring list since at least February 2010. It is working with MENAFATF to address systemic and deeply entrenched AML/CFT deficiencies, which are compounded by significant terrorist financing risks and the ongoing conflict in the region. The October 2025 statement confirms that Syria continues to work on its action plan.

4.16 Venezuela

Venezuela was added to the grey list in June 2024, working with CFATF.55 The country has a long and complex history of engagement with the FATF, having been in a follow-up process for many years before being removed and now re-listed. The basis for its current listing is the profoundly weak results of its 2023 MER, which found that Venezuela had zero of the 40 Recommendations rated as "Compliant" and zero of the 11 Effectiveness Outcomes rated as "Highly Effective" or "Substantially Effective".57 This indicates a near-total lack of an effective AML/CFT system. Its action plan will necessarily focus on addressing these fundamental gaps across its entire regime. The October 2025 report confirms that Venezuela is working to implement its action plan.

4.17 Vietnam

Vietnam was placed on the grey list in June 2023, having previously been removed in 2..58 Its 2022 MER identified key weaknesses in beneficial ownership transparency, supervision of DNFBPs, regulation of virtual assets, and a low rate of ML prosecutions.58 Its action plan, which it is implementing with the APG, requires Vietnam to address a wide range of issues, including: (1) increasing risk understanding and domestic coordination; (2) enhancing international cooperation; (3) implementing effective risk-based supervision; and (4) taking action to regulate virtual assets and virtual asset service providers (VASPs). As of October 2025, the FATF notes that Vietnam has taken "some steps" to improve its regime. Recent legislative and regulatory actions, such as the issuance of Circular 27 in September 2025, demonstrate a commitment to reform by tightening rules on CDD, risk assessment, and transaction reporting thresholds.

4.18 Virgin Islands (UK)

The British Virgin Islands (BVI) was added to the grey list in June 2025, a move that sent a strong signal to international financial centers globally.15 The BVI's case is a clear illustration of the FATF's paradigm shift towards effectiveness. The jurisdiction was grey-listed despite having a very high level of technical compliance, with its 2024 Technical Compliance assessment rating it as Compliant or Largely Compliant with 36 out of the 40 FATF Recommendations. The listing was based purely on its lack of demonstrated effectiveness. Its action plan, therefore, does not focus on legal reforms but on producing tangible results. The BVI must work with the CFATF to: (1) improve the effectiveness of its risk-based supervision; (2) systematically pursue ML investigations and prosecutions in line with its risk profile; and (3) demonstrate an increase in the seizure and confiscation of criminal proceeds. The BVI chose to defer reporting for the October 2025 Plenary, but its government has expressed a high-level political commitment to complete the action plan within two years.

4.19 Yemen

Yemen has been under FATF monitoring since at least February 2010, making it one of the longest-tenured jurisdictions on the list. Its efforts to address systemic AML/CFT deficiencies are severely hampered by the ongoing conflict, humanitarian crisis, and fragmented governance.65 Its last full MER was conducted in 2008.65 Current priorities for financial integrity, as noted by the IMF, include improving basic bank supervision and monitoring transactions linked to designated terrorist organizations.66 Yemen chose to defer reporting for the October 2025 Plenary.

Section 5: Pathways to Compliance: Lessons from De-Listed Nations

A jurisdiction's exit from the FATF grey list is a significant achievement that restores international confidence and can provide tangible economic benefits. The successful de-listing of South Africa, Nigeria, Mozambique, and Burkina Faso in October 2025 offers valuable lessons for the 19 jurisdictions still under increased monitoring. Analyzing these success stories reveals a clear roadmap for achieving compliance.

5.1 Case Study: South Africa's Successful Exit from the Grey List

"Major policy and institutional achievement"

South Africa's removal from the grey list in October 2025, after nearly three years of increased monitoring, serves as a powerful case study in effective remediation. The process was intensive and collaborative, involving sustained engagement with a dedicated FATF review team. The journey culminated in a crucial on-site visit in July 2025, where assessors came to the country to verify not only that reforms had been implemented, but that they were sustainable and embedded within the country's institutions. The successful exit was hailed by the country's National Treasury as a "major policy and institutional achievement," particularly significant following the "state capture era" which had severely weakened key law enforcement and other state institutions. The core of South Africa's success lay in its ability to demonstrate tangible results. The government's commitment was focused on achieving "measurable outcomes, including successful investigations, prosecutions, and sanctions as they relate to AML/CFT". This indicates a shift from theoretical compliance to practical enforcement, a key demand of the FATF's current evaluation methodology. However, the South African National Treasury issued a critical warning against complacency. It emphasized that the FATF requires countries that have exited the grey list to demonstrate continued commitment and to keep producing measurable outcomes. This underscores a crucial point: de-listing is not a final destination but a milestone in an ongoing process of maintaining a robust and effective AML/CFT regime. This reality is further evidenced by the trend of "re-listing," where jurisdictions like Kenya, Namibia, and Nepal have found themselves back on the grey list years after their initial removal, suggesting that their initial reforms were either not sustained or failed to keep pace with the FATF's evolving and more stringent standards.

5.2 Analysis of Common Success Factors in Remediation Action Plans

By examining the cases of successfully de-listed nations and the progress of those currently on the list, a clear set of common success factors emerges:

• High-Level Political Commitment: This is the non-negotiable foundation for any successful remediation effort. As demonstrated by South Africa's government-led initiative and the public commitments from leaders in Monaco and the British Virgin Islands, a clear, top-down directive to prioritize and resource the action plan is essential to mobilize the necessary state agencies and pass required legislation.
• Swift Legislative and Regulatory Action: Countries must act decisively to close the technical compliance gaps identified in their MERs. This often involves amending existing laws or passing new ones to align with the FATF 40 Recommendations. Vietnam's rapid overhaul of its AML Law and the issuance of implementing circulars to address specific deficiencies is a prime example of this necessary legislative and regulatory agility.60
• A Demonstrable Focus on Effectiveness: The ultimate objective is not merely to reform laws but to produce tangible results. This requires a fundamental shift in focus toward enforcement outcomes. Countries must be able to demonstrate, with data, an increase in the number and complexity of money laundering and terrorist financing investigations and prosecutions. Furthermore, they must show that they are successfully tracing, seizing, and confiscating the proceeds of crime. This shift from a legalistic to an empirical standard of compliance is arguably the most challenging aspect of the FATF's current methodology.
• Adequate Resource Allocation: Implementing an action plan is a resource-intensive endeavor. Success depends on dedicating significant and sustained financial and human resources to key institutions. This includes strengthening the analytical capacity of the FIU, providing advanced training and tools to law enforcement and prosecutors, and ensuring that supervisory bodies are adequately staffed to conduct effective risk-based supervision. Monaco's progress was explicitly linked to its investment in more human and technical resources for its FIU and judiciary.

Section 6: Strategic Implications for Global Financial Institutions and Businesses

The FATF's list of Jurisdictions under Increased Monitoring is not merely a report card for governments; it is a critical instrument of risk management for the global private sector. For financial institutions, multinational corporations, and other regulated entities, the October 2025 update has direct and immediate strategic implications for their compliance frameworks, risk appetites, and operational procedures.

6.1 A Practical Guide to Enhanced Due Diligence (EDD) for Grey-Listed Jurisdictions

While the FATF's official guidance states that a grey list designation does not automatically require the application of Enhanced Due Diligence (EDD), the practical reality of the global regulatory environment dictates otherwise. Regulators in major financial centers, as well as correspondent banking partners, expect firms to have a dynamic, risk-based compliance program. A public declaration by the global standard-setter that a jurisdiction has "strategic deficiencies" in its AML/CFT framework is a material risk factor that cannot be ignored. Consequently, it is a matter of regulatory expectation and sound risk management for firms to apply heightened scrutiny to clients and transactions associated with grey-listed jurisdictions.

6.2 Integrating FATF Listings into Corporate Risk and Compliance Frameworks

To manage the risks associated with the FATF lists effectively, firms must embed these updates into their core compliance architecture. This is not a one-time task but an ongoing process that requires agility and attention to detail.

The escalating compliance burden driven by the FATF's monitoring process has a significant third-order effect: it acts as a powerful catalyst for the global Regulatory Technology (RegTech) market. The need for continuous screening, real-time transaction monitoring, sophisticated risk-scoring, and detailed documentation creates a compelling business case for financial institutions to move away from manual processes and invest heavily in automated solutions.67 This demand for efficiency and effectiveness in the face of growing regulatory complexity directly fuels innovation and growth in the RegTech sector, making the FATF's policy decisions an indirect but potent driver of technological development in finance.

Section 7: The Future of Global AML/CFT Enforcement

The fight against financial crime is a dynamic field, shaped by the evolving tactics of criminals, technological advancements, and shifting geopolitical priorities. The FATF, as the global standard-setter, is continuously adapting its approach to meet these new challenges. Understanding these future trends is essential for both jurisdictions seeking compliance and private sector entities navigating the regulatory landscape.

7.1 The FATF's Evolving Priorities: Effectiveness, Risk-Based Approaches, and New Technologies

The FATF's strategic direction points towards several key priorities that will define the future of AML/CFT enforcement:

• The Unwavering Primacy of Effectiveness: The most significant evolution in the FATF's methodology is the decisive shift from focusing on "technical compliance" to demanding "effectiveness." As starkly illustrated by the 2025 grey-listing of the British Virgin Islands—a jurisdiction with a strong legal framework but insufficient enforcement results—the FATF's upcoming fifth round of mutual evaluations will intensify this focus. Countries will be judged not on the quality of their laws, but on their ability to produce tangible outcomes: successful prosecutions, significant asset confiscations, and the demonstrable use of financial intelligence to disrupt criminal and terrorist networks.
• The Digital Transformation of AML/CFT: The FATF is actively promoting the use of technology to make AML/CFT efforts more efficient and effective.69 This digital transformation is a central theme of its future work, with several key trends emerging:
  • Artificial Intelligence (AI) and Machine Learning (ML): These technologies are poised to revolutionize compliance by enabling enhanced transaction monitoring, predictive risk analysis, and the detection of complex illicit networks that traditional rule-based systems often miss. Financial institutions are increasingly expected to leverage AI to move beyond simple threshold-based alerting to more sophisticated, behavior-based detection.68
  • Data Pooling and Collaborative Analytics: The FATF is encouraging innovative approaches that allow financial institutions to share insights on suspicious activities and criminal networks without breaching data privacy laws. This involves the use of Privacy-Enhancing Technologies (PETs) like federated learning and zero-knowledge proofs, which can help to identify criminals who exploit information gaps by using multiple banks.69
  • Reliable Digital Identity (ID): The FATF recognizes that robust and reliable digital ID systems can make Customer Due Diligence processes significantly cheaper, faster, and more secure. This not only improves compliance effectiveness but also promotes financial inclusion by making it easier for underserved populations to access financial services.69
• Closing Gaps in Virtual Asset Regulation: The global implementation of the FATF's standards for Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs) remains a top priority. Many jurisdictions still lack adequate regulatory frameworks for this sector. The FATF continues to push for the adoption of its requirements, including the "travel rule" (Recommendation 16), which mandates that VASPs obtain, hold, and transmit required originator and beneficiary information for virtual asset transfers. This focus on technology creates a dynamic of a technological arms race. The FATF's own "Horizon Scan" warns that criminals are already exploiting generative AI and deepfakes to facilitate sophisticated fraud and money laundering schemes. In response, regulators and financial institutions are being compelled to adopt equally advanced AI-driven defensive systems. This signals a paradigm shift for the compliance industry, moving it away from a reactive, rules-based posture towards a proactive, predictive model that requires new skill sets, such as data science and AI expertise, and massive investment in next-generation technology.

7.2 Expert Analysis: The Efficacy and Geopolitical Dimensions of the Grey-Listing Process

The FATF's process of publicly identifying jurisdictions with strategic deficiencies has proven to be a remarkably effective tool for driving global reform. As of February 2025, of the . jurisdictions that had been publicly identified over the years, 86 had made the necessary reforms to be removed from the process, demonstrating a high rate of success in compelling change. Despite its effectiveness, the grey-listing process is often subject to common misconceptions. It is a myth that being placed on the grey list is a surprise to a country's authorities; the process is preceded by a detailed mutual evaluation and a one-year observation period, providing ample time for remediation. It is also a misconception that grey-listing has only negative impacts. While it can trigger economic headwinds, it also serves as a powerful catalyst for necessary and positive long-term reforms, often attracting targeted technical assistance to help the country improve its systems. The process is not without its geopolitical dimensions. The system has historically faced criticism for disproportionately targeting lower-capacity, developing nations while potentially overlooking deficiencies in larger, more powerful economies. Recognizing this, the FATF announced new prioritization criteria in October 2024 that apply a more risk-based approach to the review process itself. These new procedures will prioritize the evaluation of high-income countries and jurisdictions with large financial centers, while giving least-developed countries more time to address deficiencies before being publicly listed, except in rare cases of high risk. This adjustment is expected to shift the geographic and economic focus of the grey list in the future, potentially bringing more developed economies under increased scrutiny.

Conclusion

The Financial Action Task Force's October 2025 update on Jurisdictions under Increased Monitoring paints a picture of a global financial system in a state of continuous and demanding evolution. The successful removal of four African nations from the grey list demonstrates that with high-level political will and a focus on achieving tangible results, significant progress in combating financial crime is achievable. These successes provide a clear and encouraging roadmap for the 19 jurisdictions that remain under the FATF's watchful eye. However, the report also underscores the persistent and complex challenges that define the modern AML/CFT landscape. The recurring themes of beneficial ownership transparency, effective risk-based supervision, and the need for more robust investigation and prosecution capabilities highlight the deep-seated difficulties many countries face in translating legal frameworks into measurable outcomes. The trend of re-listing previously compliant jurisdictions serves as a stark reminder that financial integrity is not a static achievement but a dynamic state that requires sustained vigilance and continuous adaptation. Two overarching themes emerge as definitive drivers of the future of global compliance. First is the irreversible pivot from technical compliance to proven effectiveness. The case of the British Virgin Islands has set a new global benchmark: having strong laws is no longer sufficient; jurisdictions must now prove, with data, that their systems work in practice. Second is the transformative role of technology. As criminals leverage AI and other digital tools to perpetrate financial crime, the global response must be equally sophisticated.