FATF Grey List: Countries with Weak AML and CTF Systems

The Grey List is a list created by the Financial Action Task Force (FATF), an international group that sets rules to fight money laundering and terrorist financing. The Grey List includes countries that have weaknesses in their anti-money laundering (AML) and counter-terrorist financing (CTF) systems but have promised to fix these problems.

Being on the Grey List means that these countries are considered higher risk for financial crimes. Banks and businesses around the world are more careful when dealing with these countries. The list encourages countries to improve their laws and controls to avoid being placed on a more serious list called the Black List.

Real-Life Example: Pakistan and the Grey List

Pakistan was placed on the FATF Grey List in June 2018 because it had weak controls to stop money laundering and terrorist financing. FATF asked Pakistan to take specific actions, such as:

• Better monitoring of financial activities linked to terrorist groups.
• Improving laws to catch and punish those involved in financing terrorism.
• Increasing transparency in its financial system.

Because of being on the Grey List:

• International banks became more cautious with transactions involving Pakistan.
• Pakistan faced difficulties getting international loans and investments.
• The government took steps to strengthen its AML and CTF laws and enforcement.

After making enough progress, Pakistan was removed from the Grey List in October 2022.