Nigeria and South Africa added to FATF Grey List

In our article on the Financial Action Task Force (FATF), we explained the important role that this inter-governmental organisation has in the world-wide fight against money laundering and terrorist financing. We highlighted the importance of tracking updates published by the FATF, and how changes to the list of high-risk countries maintained by the FATF may mandate changes to the type of due diligence you apply to your clients.

The FATF maintains two lists of high-risk countries – a “blacklist” and a “grey list”. The blacklist, officially known as “High-Risk Jurisdictions Subject to a Call for Action” includes countries that are considered to be non-cooperative in the global fight against money laundering and terrorist financing. The “grey list”, officially known as “Jurisdictions under Increased Monitoring” includes countries that are identified by the FATF to have strategic deficiencies in their AML/CFT regimes but are making significant efforts to improve and are working with the FATF to resolve these issues within the agreed timeframes.

These lists are usually updated every four months at the end of the FATF’s plenary session, a meeting open to delegations from all 200+ FATF member countries.

Following last Friday’s plenary session, the FATF has updated the list of high-risk countries as explained in more detail below.

Changes to FATF Blacklist and Grey List

The following countries were added to the list of Jurisdictions under increased monitoring also known as the grey list:

• Nigeria
• South Africa

On the other hand, the following countries have been taken off this list:

• Cambodia
• Morocco

Latest FATF Lists

Added to the Grey List: Nigeria and South Africa

In adding Nigeria and South Africa to the grey list, the FATF acknowledged that both countries made significant progress to improve their AML/CFT regime following their Mutual Evaluation Reports (MER) from 2021.

Nigeria has committed to follow the FATF action plan which includes updating the country’s AML/CFT strategy, improving risk-based supervision of financial institutions and Designated Non-Financial Businesses and Professionals (DNFBPs), ensuring that beneficial ownership information is kept updated and improving law enforcement and sanctioning for breaches.

The FATF and South Africa agreed on an action plan that includes improvement on risk-based supervision of DNFBPs with supervisors expected to issue effective and proportionate sanctions to business that do not comply with relevant AML regulations. The FATF also expects an increase in law enforcement activities, investigations and prosecutions and improvements to ensure that beneficial ownership information is kept up-to-date and available to authorities in a timely manner.

Taken off the Grey List: Cambodia and Morocco

Cambodia and Morocco, which were put on the grey list in February 2019 and February 2022 respectively, are now no longer subject to increased monitoring. The FATF had determined in October 2022 that both countries had made significant improvements in their AML regime’s deficiencies and was looking to carry out on-site visits to confirm this. While these visits have bene postponed due to the COVID-19 situation, both countries have been taken off from the grey list.