FATF Reinstates North Korea, Iran, and Myanmar on Blacklist; Nepal Among 18 Nations Still on Greylist
In its latest evaluation report, the Financial Action Task Force (FATF) — the global body responsible for monitoring money laundering and terrorist financing — has reinstated North Korea, Iran, and Myanmar on its blacklist. The organization stated that these countries continue to demonstrate serious strategic deficiencies in their anti-money laundering (AML) and counter-terrorist financing (CFT) systems.
At the same time, eighteen countries, including Nepal, continue to remain under increased monitoring, commonly known as the greylist. The FATF has warned that nations failing to implement corrective actions within the specified timeframe could face stricter global financial restrictions and loss of access to international banking networks.
FATF: The Global Watchdog for Financial Integrity
The Financial Action Task Force, or FATF, is an intergovernmental organization established in 1989 by the G7 nations. Its main mission is to set international standards and promote effective implementation of legal, regulatory, and operational measures for combating money laundering, terrorist financing, and other related threats to the integrity of the global financial system.
The FATF currently has 39 members, including major economies like the United States, India, China, and the European Union. It works closely with regional bodies such as the Asia-Pacific Group (APG), MENAFATF, and ESAAMLG to assess compliance and ensure transparency in financial systems worldwide.
Every few months, FATF publishes two important lists:
- The Blacklist (High-Risk Jurisdictions) — for countries with severe and persistent deficiencies.
- The Greylist (Jurisdictions Under Increased Monitoring) — for countries that are making progress but still pose risks.
Countries Reinstated on FATF Blacklist: North Korea, Iran, and Myanmar
In its October 2025 review, FATF decided to relist North Korea (DPRK), Iran, and Myanmar on its high-risk jurisdictions or blacklist, citing lack of progress, repeated non-compliance, and inadequate implementation of previous commitments.
1. North Korea: A Continuing Global Security Threat
The FATF emphasized that North Korea’s illicit weapons programs — including nuclear and ballistic missile development — and state-sponsored money laundering pose a grave risk to global security.
North Korea’s integration with global financial channels, despite ongoing UN sanctions, has raised significant concerns. FATF urged all member nations to:
- Terminate financial relationships with North Korean entities and individuals.
- Close any remaining DPRK-linked bank branches operating abroad.
- Implement strict compliance with UN Security Council resolutions designed to curb proliferation financing.
According to the FATF, North Korea’s access to informal banking systems and use of cryptocurrency exchanges has further complicated enforcement. The body called for enhanced vigilance among international banks, urging countries to report and freeze suspicious transactions related to DPRK.
2. Iran: Incomplete Action Plan Since 2018
Iran was first placed on the FATF blacklist after failing to complete its Action Plan — a set of commitments aimed at strengthening its AML/CFT framework. The plan was expected to be completed in 2018, but since then, no substantial progress has been achieved.
Although Iran ratified the UN convention on counter-terrorism financing in 2025, FATF stated that “several major deficiencies remain”. The organization expressed concern over:
- Lack of transparency in beneficial ownership information.
- Weak enforcement against terror-financing networks.
- Limited cooperation with international financial intelligence units (FIUs).
- Failure to implement risk-based supervision across banking and non-banking sectors.
Since February 2020, Iran has submitted multiple progress reports, but the FATF noted that these lacked verifiable outcomes. As a result, FATF has recommended that member nations tighten restrictions on Iranian banks and financial institutions, refrain from opening new branches or subsidiaries, and adopt a risk-based approach in transactions involving Iran.
3. Myanmar: Blacklisted Again Amid Political and Financial Uncertainty
Myanmar, first blacklisted in October 2022, continues to lag behind on most action plan commitments. The FATF observed that the country has made minimal progress in implementing reforms to its AML/CFT regime.
The organization specifically highlighted serious gaps in:
- The use of financial intelligence by law enforcement agencies.
- International cooperation in criminal investigations.
- The seizure and confiscation of illicit assets.
Although Myanmar has improved the management of seized property, FATF concluded that these efforts remain insufficient. It issued a warning that if Myanmar does not show substantial progress by October 2025, it could face further restrictive measures, including sanctions and increased international isolation.
Greylist: 18 Countries Still Under FATF Monitoring
In addition to the blacklisted nations, the FATF also reviewed 18 countries that remain on its greylist — a category for countries that are cooperating with FATF to address identified deficiencies but have not yet achieved full compliance.
The countries currently under increased monitoring include:
Nepal, Algeria, Angola, Bulgaria, Cameroon, Côte d’Ivoire, the Democratic Republic of the Congo, Kenya, Laos, Monaco, Namibia, South Sudan, Syria, Venezuela, Vietnam, and others.
Among these, Nepal has drawn particular attention following its inclusion in February 2025.
Nepal’s Status: Greylisted for AML/CFT Deficiencies
Nepal was placed on the greylist earlier in 2025 after the FATF and the Asia Pacific Group (APG) identified multiple weaknesses in its financial regulatory and enforcement systems.
The FATF acknowledged that Nepal has expressed commitment to strengthening its anti-money laundering and counter-terrorist financing framework, but significant challenges remain. The organization recommended that Nepal must:
- Enhance risk assessment systems to better identify money laundering and terror financing threats.
- Increase oversight and inspections of high-risk sectors such as banks, cooperatives, real estate, and casinos.
- Crack down on informal money transfer channels (hawala and hundi systems).
- Improve coordination among regulatory, financial, and law enforcement bodies.
- Strengthen asset confiscation mechanisms and ensure criminal proceeds are effectively seized.
- Enact legal reforms aligning domestic laws with FATF standards.
If Nepal fails to achieve satisfactory progress within two years, the country risks being blacklisted, which could have severe implications for its banking system, foreign investment, and international remittance inflows.
The FATF has encouraged Nepal to work closely with the APG and seek technical assistance from partner countries to expedite reforms.
Countries Removed and Pending Review
In a more positive development, the FATF announced that Burkina Faso, Mozambique, Nigeria, and South Africa have been removed from the greylist following significant progress in strengthening their financial systems.
These nations demonstrated improved:
- Transparency in beneficial ownership records.
- International cooperation on financial crimes.
- Enforcement against high-risk transactions.
- Supervision of banking and non-banking sectors.
Meanwhile, Bolivia, Haiti, Lebanon, the British Virgin Islands (UK), and Yemen have delayed submission of their required progress reports. FATF noted that while enhanced due diligence is not yet mandated for these nations, they are expected to comply within the stipulated deadlines.
Understanding the FATF Lists: Blacklist vs. Greylist
To understand the significance of the FATF decision, it’s important to distinguish between the two categories:
1. The Blacklist (High-Risk Jurisdictions Subject to a Call for Action)
Countries placed on the blacklist are those that pose the highest risk to the global financial system due to persistent non-compliance and lack of political will to address AML/CFT concerns.
- These nations face severe financial sanctions, restricted trade, and isolation from international banking systems.
- Global financial institutions are urged to terminate relationships with entities from these countries.
- Investment and development assistance are frozen or limited until corrective actions are verified.
2. The Greylist (Jurisdictions Under Increased Monitoring)
Countries on the greylist are considered “partially compliant”. They have committed to working with the FATF to resolve identified issues but have not yet achieved full implementation.
- These countries remain under continuous monitoring.
- Failure to make adequate progress can lead to blacklisting.
- Greylisted status often leads to increased scrutiny of international transactions and higher compliance costs for local businesses.
Global Implications of FATF Actions
The FATF’s decisions carry significant geopolitical and economic consequences. Being blacklisted can:
- Severely limit a country’s access to international capital markets.
- Lead to currency depreciation and foreign investment withdrawal.
- Increase transaction costs and delays in international trade.
- Reduce foreign aid and development funding due to risk concerns.
Greylisted countries, while not under full sanctions, face heightened due diligence from banks and investors, which can slow down economic growth and undermine financial confidence.