In February 2025, the Financial Action Task Force (FATF) revised its list of jurisdictions under increased monitoring—commonly referred to as the “grey list.” Notably, Laos and Nepal were added due to strategic deficiencies in their anti-money laundering and counter-terrorist financing (AML/CFT) regimes. Simultaneously, the Philippines was removed after making significant progress in strengthening its frameworks.
For financial institutions with exposure to Southeast Asia, these updates are far more than bureaucratic reshuffling. They necessitate an immediate recalibration of risk-based AML controls. Transactions involving high-risk jurisdictions require enhanced due diligence (EDD), frequent client reviews, and often, regulatory reporting.
The inclusion of Laos and Nepal suggests lingering vulnerabilities such as weak supervisory frameworks, under-resourced financial intelligence units, and inadequate beneficial ownership transparency. Institutions operating across borders—especially correspondent banks, remittance services, and crypto exchanges—must be especially vigilant. The reputational and financial costs of violating sanctions or facilitating illicit transactions are rising sharply, as evidenced by recent fines exceeding hundreds of millions.
The removal of the Philippines, while encouraging, also brings new opportunities. Reduced friction for onboarding clients from the region and easing of due diligence burdens may result. However, caution is still warranted, and residual risk assessments should remain.
Finassent advises compliance professionals to monitor FATF outcomes closely and integrate real-time watchlist updates into their internal systems. Moreover, automated risk-scoring tools and AML regtech platforms can enhance your capacity to adapt dynamically to such changes without overstretching compliance resources.
These FATF changes reinforce an overarching message: global compliance is an evolving landscape, and staying reactive is no longer sufficient—institutions must become proactively adaptive.
Source: Jurisdictions under Increased Monitoring – 21 February 2025 and Outcomes FATF Plenary, 19-21 February 2025
Image Source: https://www.fatf-gafi.org/content/experience-fragments/fatf-gafi/en/site/header/master/jcr%3acontent/root/image.coreimg.png/1682926673735.png
