New criteria introduced by the Financial Action Task Force (FATF) could see a significant decrease in the number of countries on the AML greylist.
At the heart of the changes is alleviating pressure on less developed regions, instead placing the focus on countries that exhibit higher threat levels when it comes to AML.
The new changes could lead to as many as half of the currently listed countries being delisted as ‘low-capacity countries’ are filtered out.
As a result of the changes, countries will be assessed against three criteria in order to avoid being put on the greylist.
Looking to focus on the most significant threats, only countries listed on the World Bank High-Income Countries list, or have financial sector assets above more than US$10bn measured by ‘broad money’, will be eligible for the list.
Any country classified as a ‘least developed country’ under United Nations (UN) definitions will not be prioritised for an active FATF review, which is part of the process for when a country is placed on the greylist for being financially unsound.
Lesser developed countries could still be sanctioned in the event of the FATF agreeing that a significant money laundering, terrorist financing or proliferation of financing risks exists.
Nonetheless, if they do end up on the greylist they could be given a longer observation period than others.
The new criteria will be applied during the next round of FATF assessments, and so could result in some countries being removed from the greylist or fewer countries being added to it.
The FATF statement read: “The changes made by the FATF will ensure the listing process better targets the countries that pose the greatest risk to the international financial system and contributes to more adequate support to low-capacity countries.
“The impact of illicit financial flows is felt most strongly by the least developed countries as it impedes sustainable development,” the FATF explained.
“Proceeds of crimes, such as tax evasion, corruption and organised crime, divert billions of dollars annually away from essential public goods like education and health.
“Depriving criminals from their ill-gotten gains is crucial to help these countries build robust economies and societies.”
The FATF greylist currently consists of Bulgaria, Burkina Faso, Cameroon, Croatia, the Democratic Republic of Congo, Haiti, Jamaica, Mali, Mozambique, Nigeria, Philippines, Senegal, South Africa, South Sudan, Syria, Tanzania, Türkiye, Vietnam and Yemen.
The GT AML and CTF initiative also maintains a separate ‘blacklist’ of high-risk jurisdictions, which currently only has three countries on its books – Iran, Myanmar and North Korea.
A look at the greylist shows that a significant percentage of listed countries are classed as developed according to UN standards. The FATF is concerned that these countries’ presence on the list could hold back economic development.