FATF Black List and Grey List Updates - June 2025

On 16 June the Financial Action Task Force (FATF) published its latest update to the lists of jurisdictions with strategic deficiencies in anti-money laundering (AML), counter-terrorist financing (CTF), and counter-proliferation financing (CPF) regimes.

The FATF Black List – no change

There have been no changes to the FATF Black List (high-risk jurisdictions subject to a call for action):

• North Korea
• Iran
• Myanmar

FATF continues to consider that these jurisdictions pose a serious threat to the integrity of the global financial system due to persistent, significant gaps in their AML/CTF/CPF frameworks.

Iran: renewed international focus

This update lands amid a resurgence in international scrutiny of Iran, following significant political and diplomatic developments over the last weekend.

Against this backdrop, Iran’s continued presence on the FATF blacklist reinforces the compliance risks associated with doing business involving Iranian individuals, assets, or counterparties, whether directly or indirectly. And the focus on Iran’s nuclear proliferation programme highlights the risks for UK law firms of becoming involved in proliferation financing.

FATF Grey List – new entries and removals

There have been changes to the FATF ‘Grey List’, formally known as ‘Jurisdictions under Increased Monitoring’. Grey List countries are actively working with FATF to address deficiencies, but still considered by FATF to present an elevated risk.

New additions to the Grey List:

• Algeria
• Angola
• Bolivia
• Côte d’Ivoire
• Lebanon
• British Virgin Islands

Removed from the Grey List:

• Croatia
• Mali
• Tanzania
  
  

How law firms should respond to the FATF updates

To remain compliant and demonstrate a robust risk-based approach, firms should take the following steps:

Review and update your Firm Wide Risk Assessment (FWRA)

The Legal Sector Affinity Group (LSAG) Guidance (5.6.2) defines geographic risk as pertaining to the countries or regions where your business operates, receives funds from, or where your clients are located. It also includes any social, cultural, or linguistic connections that might increase the association with a known high-risk jurisdiction or area.

Review client portfolios

Audit your client base to assess whether there is current or historical exposure to the newly listed countries. This includes corporate structures with overseas elements, international real estate holdings or clients who reside in a country on the FATF Grey List. Consider whether your practice is involved in multi-jurisdictional matters, as money launderers are often attracted to activities that move money or value across borders, thereby obscuring ownership and frustrating investigations.

Conduct Enhanced Due Diligence (EDD)

Conduct Enhanced Due Diligence (EDD) for all clients, transactions, or counterparties with ties to black or grey listed jurisdictions i.e. where there is beneficial ownership, fund flow, client or asset exposure. This may involve repeating checks and/or asking for more information from clients with ongoing matters.

Provide update training for your fee earners

Circulate a briefing note or deliver a short, targeted session for staff, particularly those involved in onboarding, KYC checks, and new client matter inception. Reinforcing awareness of high-risk jurisdictions helps reduce the risk of accidental non-compliance amongst your teams.

Engage with Third-Party Providers

If your firm outsources AML screening or uses a third-party electronic identification and verification platform, check that their systems have been updated to reflect the June 2025 FATF listings.

Advise clients who have international exposure

Firms offering corporate or private wealth services should inform affected clients about the increased compliance implications of dealing with high-risk jurisdictions, particularly when structuring transactions or establishing new entities.

Keep up to date with changes to the FATF lists

Any amendments are made in February, June or October each year at the conclusion of a FATF plenary session.

Cast your net widely

Remember that other jurisdictions that are not on the FATF lists may also present a high risk of money laundering, and enhanced due diligence may be advisable.

Top tip: We recommend that law firms conduct a risk assessment for every country their clients are connected with, recording the results in their FWRA and in relevant client and matter risk assessments. List all the countries to which your firm is exposed, including those where you offer services, facilitate matters involving that country, or have clients established there.

In addition to FATF, consult other resources to help assess whether a country is high risk, including:

• KnowYourCountry – Country Anti Money Laundering Reports
• Transparency International’s corruption perception index
• The Basel AML Index
• CIA World Factbook
• S. International Narcotics Control Strategy Reports (INSCR)

How to identify higher risk countries

Key considerations when assessing the AML/CTF risk of a country include:

• Inadequate anti-money laundering legislation, systems, practices, and supervision
• High levels of acquisitive crime and/or significant levels of corruption
• The production of drugs, drug trafficking/trade, terrorism or corruption is prevalent
• ‘Offshore financial centres’ or tax havens
• Local requirements around company governance make it challenging to understand the control structure of an entity

If you are unable to effectively assess the risk posed by a particular jurisdiction, consider whether your firm should continue to act for clients or in matters associated with those jurisdictions.

Don’t overlook sanctions risk!

The consolidated sanctions list details the countries in which sanctioned individuals and organisations are based. This may also provide an indication of the relative risk of each jurisdiction. You can check jurisdiction risk through a free online  OFSI search.

If you’d like some help with any of the issues raised here, please do get in touch.