In an increasingly regulated financial and corporate environment, knowledge of international compliance frameworks is vital. The Financial Action Task Force (FATF), considered the world’s leading standard-setting body for combating money laundering and terrorist financing, plays a pivotal role in shaping global Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) policies. This article outlines what the FATF is, explains the lists it maintains, examines Cyprus’s involvement in this framework, and presents the most recent updates, while also providing practical insights for businesses and professionals operating in high -risk markets.
What is the FATF?
The FATF is an intergovernmental organization established in 1989 by the G7 to develop and promote policies to combat money laundering, terrorist financing, and other threats to the integrity of the international financial system. It is globally recognized for its 40 Recommendations, which were first published in 1990 and have since become the benchmark for AML/CFT compliance. Over 200 jurisdictions have committed to implementing these recommendations through the FATF's global network of members and FATF-Style Regional Bodies (FSRBs), which facilitate regional cooperation and evaluation. Although the FATF’s recommendations do not have the force of law, they carry significant weight in shaping national legislation and influencing international financial relationships.
The FATF Lists
Among the FATF’s most powerful tools are two key documents issued three times per year, which identify jurisdictions with strategic AML/CFT deficiencies.
The first document, known as "High-Risk Jurisdictions Subject to a Call for Action" (commonly referred to as the blacklist), includes countries that have significant shortcomings in their AML/CFT frameworks. These jurisdictions present serious threats to the international financial system and often face countermeasures from FATF members.
The second document, titled "Jurisdictions Under Increased Monitoring" (commonly referred to as the grey list), identifies countries actively working with the FATF to address strategic deficiencies within a specified timeframe. Inclusion on this list implies political commitment and cooperation with the FATF but also signals heightened risk and scrutiny.
As of the latest update in June 2025, the grey list includes: Algeria, Angola, Bolivia, Bulgaria, Burkina Faso, Cameroon, Côte d'Ivoire, Democratic Republic of the Congo, Haiti, Kenya, Lao People’s Democratic Republic, Lebanon, Monaco, Mozambique, Namibia, Nepal, Nigeria, South Africa, South Sudan, Syria, Venezuela, Vietnam, the Virgin Islands, and Yemen.
The black list currently includes: the Democratic People’s Republic of Korea (North Korea), Iran, and Myanmar.
Consequences of FATF Listing
Being listed by the FATF has serious consequences for a jurisdiction. Countries included in these lists, especially the blacklist are perceived as high-risk by the international financial community. As a result, counterparties originating from those jurisdictions may face significant restrictions. Financial institutions and businesses engaging with these regions are expected to apply Enhanced Due Diligence (EDD) measures, including stricter customer verification, ongoing monitoring, and, in some cases, limiting transactions or business relationships altogether.
Cyprus’s Role in the FATF Framework
Cyprus is not a direct member of the FATF but participates through MONEYVAL, one of the FATF-Style Regional Bodies (FSRBs). MONEYVAL evaluates compliance with FATF standards and monitors the implementation of effective AML/CFT measures in its member states. As a member of the European Union and MONEYVAL, Cyprus aligns its regulatory framework with FATF standards and has consistently improved its AML/CFT regime through legislative and institutional reforms. The country underwent its latest full mutual evaluation by MONEYVAL in May 2019, with the report adopted in December of that year. Since then, Cyprus has submitted regular follow-up reports in 2021, 2022, 2023, and most recently in May 2025, through a written procedure, demonstrating its ongoing efforts to address identified shortcomings.
Conclusion
Understanding the FATF’s function and the implications of its lists is essential for legal professionals and businesses, particularly those engaged in cross-border activity or operating in high-risk markets. Jurisdictions listed by the FATF face increased scrutiny, and entities dealing with them must adopt robust compliance procedures, including Enhanced Due Diligence (EDD).
Businesses and legal advisors operating in or interacting with high-risk jurisdictions are advised to proactively assess exposure, implement strict due diligence frameworks, and ensure full alignment with AML/CFT obligations. A forward-looking compliance culture is essential not only to meet regulatory expectations but also to safeguard long-term commercial viability in high-risk markets.
How Can Ι. Frangos & Associates Assist You?
Our Legal team provides expert advice on a wide range of compliance and Anti-Money Laundering (AML) matters. We deliver practical and business-focused guidance tailored to your specific needs and are equipped to assist you with the development of internal policies, conducting comprehensive risk assessments, performing thorough customer due diligence, and liaising effectively with supervisory authorities. For more information, please send your queries at info@frangoslaw.com.