The Financial Action Task Force, known as FATF, sets the global rules for stopping money laundering and terrorist financing. Its decisions shape how banks, law firms, accountants and other regulated businesses in the UK treat customers and transactions linked to certain countries. This guide explains what FATF is, what its grey list and blacklist mean, which countries sit on each list right now, and why any of this matters if you run or register a business.
What Does FATF Stand For?
FATF stands for the Financial Action Task Force. In French, the body is called the Groupe d’action financière, shortened to GAFI. It was created in 1989 at the G7 summit in Paris and works in both English and French as its official languages.
The name describes the job. FATF is a task force: a group of governments that pool resources to tackle a shared problem. That problem is the movement of dirty money through the global financial system, whether the source is drug trafficking, fraud, corruption, terrorism or the financing of weapons.
What Is FATF and What Does It Do?
FATF is an inter-governmental body that sets international standards for fighting money laundering, terrorist financing and the financing of weapons proliferation. It does not pass laws itself. Instead, it agrees on standards that member countries promise to write into their own national rules.
The Main Purpose of FATF
The purpose of FATF is to protect the integrity of the global financial system. Criminals need to move and hide the proceeds of crime, and terrorist groups need funding to operate. FATF works to close the gaps that let this money flow undetected across borders.
To do that, FATF sets the standards (the FATF Recommendations) that countries should follow, checks how well each country applies them, identifies countries with serious weaknesses, and publishes guidance on emerging risks such as crypto assets and cyber-enabled fraud.
How FATF Fights Financial Crime
FATF works through three main activities. First, it researches how criminals launder money and fund terrorism, tracking new methods and trends. Second, it reviews each member country through a detailed assessment called a mutual evaluation. Third, it names countries that fall short, which puts public and financial pressure on them to improve.
This naming process carries real weight. When FATF flags a country, banks and businesses around the world react, often by applying stricter checks or pulling back from doing business there.
How Many Countries Are in FATF?
FATF is a small club at its core, but its influence reaches almost every country on the planet through a wider network of partner bodies.
FATF Members and Global Network
FATF has 40 members: 38 member jurisdictions plus two regional organisations, the European Commission and the Gulf Cooperation Council. The United Kingdom is a founding member, having joined at the body’s creation in 1989. Russia’s membership has been suspended since 2023, although the country still appears in the formal count.
Beyond its own members, FATF sits at the centre of a much larger network. Nine FATF-Style Regional Bodies extend its reach across the world, and more than 200 jurisdictions have committed to applying the FATF Recommendations.
How Countries Commit to FATF Standards
Membership is a serious commitment. To join, a country must show it will apply the FATF Recommendations and submit to regular peer review. Members fund the body, send delegates to plenary meetings three times a year, and accept that their own systems will be assessed and graded in public.
Through the regional bodies, even non-members agree to be evaluated against the same standards, which is how FATF achieves close to global coverage.
What Are the FATF Recommendations?
The FATF Recommendations are the heart of the system. They are the standards every member and partner country is measured against.
The FATF 40 Recommendations Explained
The FATF Recommendations are 40 standards that form the global rulebook for anti-money laundering and counter-terrorist financing, often shortened to AML and CFT. First issued in 1990 and updated several times since, they cover areas such as customer due diligence and record keeping, the transparency of companies and trusts including beneficial ownership, the powers of regulators, police and financial intelligence units, and international cooperation between countries.
An earlier set of nine Special Recommendations on terrorist financing has since been folded into the main 40, so the standards now sit under one consolidated framework.
How FATF Evaluations Work
FATF checks compliance through mutual evaluations. A team of experts examines a country’s laws and, just as importantly, how well those laws work in practice. Each review takes more than a year to complete.
The current round of evaluations puts more weight on real results than on paperwork. Assessed countries receive a time-bound roadmap of recommended actions and are expected to show clear progress within three years. Recent reports adopted under this approach include Belgium, Malaysia, Austria, Italy and Singapore.
What Does FATF Compliant Mean?
The phrase FATF compliant means slightly different things for a country and for an individual business, though both come back to the same standards. Either way, it sits at the centre of financial compliance for any firm with cross-border exposure.
FATF Compliance for Countries
For a country, being FATF compliant means its AML and CFT systems meet the standards set out in the Recommendations, both on paper and in practice. A compliant country has laws that criminalise money laundering, supervises its banks and other regulated firms, runs a working financial intelligence unit, and cooperates with other countries on investigations.
Countries that fall short end up on one of the two FATF lists until they fix the problems.
FATF Compliance for Financial Institutions and Businesses
For a business, FATF compliance is less about FATF directly and more about the national rules built on top of FATF standards. In the UK, those rules are the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, usually called the Money Laundering Regulations.
A compliant UK business typically:
- Verifies the identity of its customers through know your customer checks, often shortened to KYC.
- Understands who ultimately owns and controls its corporate customers.
- Applies extra scrutiny to higher-risk customers and countries.
- Monitors transactions and reports anything suspicious.
- Keeps proper records.
UK firms are supervised for these duties by bodies such as the Financial Conduct Authority, HMRC and the professional body supervisors for sectors like law and accountancy.
FATF Grey List Explained
The grey list is the FATF list that comes up most often in day-to-day compliance work, so it is worth understanding exactly what it is and who sits on it.
What Is the FATF Grey List?
The grey list is FATF’s name for “Jurisdictions under Increased Monitoring”. A country lands on it when FATF finds strategic weaknesses in its defences against money laundering, terrorist financing or proliferation financing, and the country has agreed to fix them within set deadlines.
Being grey listed is a warning rather than a ban. The country keeps working with FATF, reports on its progress, and can be removed once it completes its action plan. Time on the list varies, often running from two to four years, though some countries stay longer.
As of the FATF plenary in February 2026, the grey list held 22 jurisdictions:
Algeria, Angola, Bolivia, British Virgin Islands, Bulgaria, Cameroon, Côte d’Ivoire, Democratic Republic of the Congo, Haiti, Kenya, Kuwait, Laos, Lebanon, Monaco, Namibia, Nepal, Papua New Guinea, South Sudan, Syria, Venezuela, Vietnam and Yemen.
Kuwait and Papua New Guinea were the most recent additions, both placed on the list in February 2026. The list changes at each plenary, so always check the current version before relying on it.
FATF Blacklist Explained
The blacklist is the more severe of the two FATF lists, reserved for the small number of countries that have not addressed their failings.
Which Countries Are Blacklisted by FATF?
The blacklist is the informal name for “High-Risk Jurisdictions subject to a Call for Action”. These are countries with serious deficiencies that they have failed to address. As of February 2026, three countries are on it:
- North Korea (the Democratic People’s Republic of Korea)
- Iran
- Myanmar
FATF calls for the strongest measures, known as countermeasures, against North Korea and Iran. For Myanmar, it calls for enhanced due diligence proportionate to the risk rather than full countermeasures.
What Happens If a Country Is Blacklisted by FATF?
Blacklisting carries heavy consequences. FATF asks its members and other countries to apply countermeasures, which can include tougher checks, limits on correspondent banking, extra reporting and, in the strongest cases, restrictions on doing business at all.
In practice, a blacklisted country can find itself cut off from much of the global banking system. International banks may refuse to deal with its institutions, foreign investment dries up, trade finance becomes harder to arrange, and the cost of any remaining cross-border activity climbs. The damage to a country’s reputation and economy can be severe and long lasting.
Grey List vs Blacklist: Key Differences
The two lists differ in severity and in what they ask of the rest of the world.
- A grey list country has admitted its weaknesses and is actively working with FATF to fix them. Banks apply extra care, but business continues.
- A blacklist country has failed to act. FATF calls for countermeasures, and the country risks being shut out of the financial system.
Put simply, the grey list means increased monitoring, while the blacklist means a call for action. Moving onto the grey list is a serious signal. Moving onto the blacklist comes close to a financial quarantine.
How FATF Identifies High-Risk Jurisdictions
FATF identifies high-risk countries through its review body, which studies each jurisdiction’s AML and CFT system, the gaps in it, and the risks those gaps create for everyone else. The findings feed into the two public lists, which FATF updates three times a year, in February, June and October.
A country can be flagged for many reasons: weak supervision of banks, poor company transparency, a failure to prosecute money laundering, or an inability to freeze terrorist assets. Often a country has laws on the books but does not apply them effectively, and that gap between rules and results is what FATF targets.
What High-Risk Status Means in Practice
For businesses, high-risk status triggers extra legal duties. Under the UK Money Laundering Regulations, any business relationship or transaction involving a person or company based in a high-risk third country must be subject to enhanced due diligence and closer ongoing monitoring.
Enhanced due diligence means digging deeper: gathering more information about the customer and the source of their funds, getting senior approval for the relationship, and watching the account more closely. Since January 2024, the UK defines its high-risk third countries directly by reference to the two FATF lists, so a change at a FATF plenary feeds straight through into UK obligations. HM Treasury publishes an advisory notice on GOV.UK after each update.
Why FATF Matters for LEIs, Businesses and the Global Economy
FATF can feel like a concern only for governments and big banks, but its standards shape everyday business activity, from onboarding a new client to opening a corporate account or arranging cross-border payments.
FATF, KYC Checks and Legal Entity Transparency
A recurring theme in the FATF Recommendations is knowing who you are really dealing with. Recommendation 24 covers the transparency of companies and other legal persons, pushing countries to keep accurate information on who ultimately owns and controls them.
This is where legal entity identification fits in. When a bank or business onboards a corporate customer, it has to confirm the company exists, who controls it, and who it is connected to. A Legal Entity Identifier, or LEI, supports that work. The LEI is a 20-character global code, set under the ISO 17442 standard, that uniquely identifies a legal entity in financial transactions.
An LEI works alongside KYC checks rather than replacing them, and holding one does not by itself make a company FATF compliant. Its value is practical: it gives banks, regulators and counterparties a single, verified reference for an entity across borders, which supports the transparency that FATF standards are built around. For companies that trade or raise finance internationally, choosing to register an LEI makes due diligence faster and smoother for the people on the other side of the deal.
Banking, Trade and Investment Impacts
FATF’s decisions reach far beyond compliance departments. When a country is grey listed or blacklisted, the effects show up across banking, trade and investment.
Studies have linked grey listing to falls in cross-border investment and lending. Banks may de-risk by cutting ties with institutions in listed countries, correspondent banking relationships shrink, and businesses in those markets face higher costs and more paperwork to move money. For UK firms, the practical impact is more checks, more documentation and slower onboarding when a customer or supplier is based in a listed country.
The other side of this is that strong FATF compliance builds trust. A country with a clean record and clear company transparency is easier and cheaper to do business with, which benefits its banks, its companies and the wider economy.
Final Thoughts on FATF
FATF rarely makes headlines, yet it quietly sets the terms for how money moves around the world. Founded by the G7 in 1989 and now backed by 40 members, it is an independent inter-governmental body, separate from the United Nations, with its secretariat housed at the OECD in Paris. Its 40 Recommendations have become the benchmark that countries build their anti-money laundering laws around, and the UK has been part of that effort from the start.
For most businesses, the part that matters is the two lists. The grey list marks countries that are working to fix known weaknesses, while the blacklist, currently North Korea, Iran and Myanmar, marks the few that have not. In the UK, those lists carry direct legal weight. Any dealing with a high-risk third country calls for enhanced due diligence, and the UK now takes its high-risk list straight from FATF, updating it after every plenary.
The wider lesson is that transparency pays. Clear ownership records, solid customer checks and a recognised reference like the LEI make a business easier and cheaper to deal with across borders, which is exactly the outcome FATF is built to encourage. If your company trades or raises finance internationally and does not yet have one, LEI24 can help you get an LEI quickly, so you are ready whenever a bank or counterparty runs its checks.
Frequently Asked Questions About FATF
What Is FATF and Its Purpose?
FATF, the Financial Action Task Force, is an inter-governmental body founded in 1989. Its purpose is setting global standards to combat money laundering, terrorist financing and weapons proliferation financing worldwide.
How Many Countries Are in FATF?
FATF has 40 members: 38 jurisdictions plus two regional organisations, the European Commission and the Gulf Cooperation Council. The United Kingdom is a founding member from 1989.
Which Country Has Been Blacklisted by FATF?
Three countries sit on the FATF blacklist as of February 2026: North Korea, Iran and Myanmar. The list is officially titled High-Risk Jurisdictions subject to a Call for Action.
Is FATF Part of the United Nations?
No. FATF is an independent inter-governmental body, separate from the United Nations. Its secretariat is hosted at the OECD in Paris, but FATF is not part of the OECD either.
