FATF Plenary February 2025 – Grey List Revisions & Regulatory Updates

The Financial Action Task Force (FATF) had its plenary meeting of the year from February 17 to 21, 2025.

After three days of technical discussions, the second Financial Action Task Force -FATF Plenary 2025, chaired by Elisa de Anda Madrazo (Mexico), came to an end.

Over 200 delegates from various jurisdictions and international organizations attended the summit.

The discussions concentrated on important topics such as money laundering and proliferation financing, terrorism funding, financial inclusion, payment transparency, and online child sexual exploitation. Several important decisions were taken, including modifications to the FATF Standards, public consultations, national monitoring lists, and leadership changes.

Let’s read this article to find all essential initiatives and AML regulatory decisions taken in the FATF plenary February 2025 meeting.

FATF Grey List Updates in February 2025

In the most recent FATF Plenary 2025 session, the Philippines was removed from the FATF Grey List, while Nepal and Laos were added.

The Grey List, formally known as the “Jurisdictions Under Increased Monitoring” list, contains countries that are actively working with FATF to resolve key gaps in their AML/CFT and proliferation funding regimes.

As an international watchdog, the FATF establishes worldwide standards to reduce money laundering, terrorist financing, and the spread of weapons of mass destruction.

The Grey List is updated three times each year by the organization to highlight achievements and ongoing issues.

Countries removed from the FATF’s Grey List (jurisdictions subject to increased monitoring)

Philippines

After nearly four years of collaboration with the Financial Action Task Force (FATF), the Philippines was removed from the Grey List.

The decision follows significant progress in resolving strategic flaws in the financial regulatory frameworks.

key reforms following this decision:

• Enhanced oversight of financial firms.
• Improved counter-terrorism finance methods
• Greater transparency in Beneficial Ownership (BO) reporting

FATF praises the Philippines’ efforts, especially its legislative reforms, including the October 2023 mandate requiring all relevant agencies to actively participate in national risk assessments for money laundering and terrorism financing and the 2021 amendment to the Anti-Money Laundering Act (AMLA).

After an on-site examination confirmed that these procedures were completed, the nation was taken off the gray list.

Countries added to the FATF’s Grey List (jurisdictions subject to increased monitoring)

Welcome to Nepal!

Nepal still has enforcement challenges in the areas of regulatory compliance, prosecution effectiveness, and financial sector monitoring, even after enacting legislative changes in 2024 that adhere to FATF criteria.

• The Asia/Pacific Group has previously criticized Nepal on Money Laundering (APG) for its tardiness in responding to significant suggestions made in its 2022 Mutual Evaluation Report (MER).
• The audit identified shortcomings in monitoring high-risk industries as well as insufficient enforcement of financial crime rules.
• These enduring problems, along with past difficulties with financial transparency, led to Nepal’s inclusion on the Grey List.

Laos (People’s Democratic Republic)

Despite efforts to implement FATF recommendations from the 2023 MER, such as increasing FIU resources and banning bearer shares, Laos continues to experience regulatory deficiencies.

The FATF plenary February 2025 has highlighted the following essential areas needing improvement before Laos may be removed from the Grey List:

• strengthening risk-based supervision in high-risk sectors including special economic zones (SEZs) and casinos.
• increasing the flow of financial intelligence to the appropriate authorities.
• increasing the number of investigations and prosecutions related to money laundering, particularly those that include international financial crime.

These updates reflect the FATF’s continuous efforts to improve global AML/CFT compliance and ensure that nations properly implement financial crime prevention measures.

FATF’s February 2025 Plenary: Key Strategic Initiatives

Encourage Financial Participation with a Risk-Based Approach

As per the FATF plenary Feb 2025, 1.4 billion people are without access to banking services, so the Financial Action Task Force is modifying its guidelines to promote financial flow while ensuring AML/CFT compliance.

After receiving over 140 submissions from financial institutions, academia, and nonprofits the FATF is revising Recommendation 1 to support risk-based AML/CFT safeguards, allowing for easy processes when risks are minimal.

As noted in a 2021 assessment, this aims to address financial exclusion and de-risking.

Targeting Child Exploitation Online

The FATF has scheduled the start of a study on using financial intelligence to disrupt live-streamed networks of child exploitation and sextortion for March 13, 2025. This report will:

• Stress how financial transactions may help identify victims and offenders.
• Describe transaction patterns and red flags that are linked to criminal activity, such as peer-to-peer transactions, prepaid cards, and micropayments.
• Stress how crucial it is for financial institutions, law enforcement, and digital companies to work together more effectively

Designation of New FATF Vice-President

The Financial Action Task Force has appointed Giles Thomson (UK) as its new vice president, succeeding Jeremy Weil (Canada), to strengthen global collaboration and leadership.

Thomson, the Director of OFSI and Economic Crime at HM Treasury, will begin a two-year tenure on July 1, 2025.

Enhancing FATF Standards through Public Consultations

The FATF is seeking feedback from policymakers and regulators on updated ideas to enhance financial inclusion and risk-based compliance.

• Recommendation 1: Promote financial inclusion using a risk-based strategy.
• Recommendation 16: Improve payment transparency and reduce financial crime risks.

Women in FATF & Global Network (WFGN) Initiative

Financial Action Task Force and Global Network (WFGN)  organized a mentorship event to support women’s financial crime compliance careers.

Beginning in March 2025, the second iteration of the FATF Mentoring Program will offer leadership development and career mentoring to female professionals.

Strengthening the Global FATF Network

The FATF is expanding its scope by permitting non-member countries to participate in FATF plenary meeting debates.

Kenya (ESAAMLG), the Cayman Islands, and Senegal all participated in this workshop, which aimed to create varied regulatory viewpoints.

Handling Corruption via Private Sector Collaboration

Performed a Horizontal Review to assess how accountants, attorneys, and real estate brokers comply with FATF AML criteria.

The Private Sector Collaborative Forum is planned for March 25-27, 2025 in Mumbai.

Future Insight

MLRO, Financial teams, and Compliance officer should;

• Prepare for the next FATF plenary meeting in June 2025, which will determine future AML/CFT policies.
• Update risk scores for countries added or withdrawn from the Grey List,
• Monitor new FATF recommendations on financial inclusion, and prevent online child exploitation.

AML Watcher Offers FATF-Compliant AML Screening Solutions

AML Watcher offers a complete AML screening solution that aligns with Financial Action Task Force guidelines.

It offers

1. Sanctions and Watchlist Screening

• Real-time screening for global sanctions lists, including FATF high-risk and monitored jurisdictions.
• Automated identification of entities sanctioned for money laundering, terrorist funding, and proliferation financing.

2. PEP and Adverse Media Screening

• Identification of politically exposed persons (PEPs) following the FATF’s risk-based methodology.
• Continuous monitoring of negative media for financial crime red flags.

3. FATF High-Risk Jurisdiction Monitoring

• Detection of businesses operating in or related to Financial Action Task Force-designated areas that require increased enhanced due diligence (EDD).
• Risk notifications for newly designated grey and blacklisted nations.

4. Enhanced Customer Due Diligence (CDD)

• AML Watcher optimizes CDD by checking customers against worldwide sanctions lists, watchlists, PEP databases, and adverse media sources.
• It ensures organizations fulfill FATF AML compliance requirements, lowering false positives, and boosting risk detection.

5.  Risk-Based Screening

• Implementing FATF’s risk-based approach with customizable risk thresholds.
• Prioritizing high-risk alerts to improve due diligence (EDD).

6.  Ongoing and Batch Monitoring

• Automated re-screening of customers, transactions, and third-party relationships against updated Financial Action Task Force lists.
• Custom batch screening to ensure FATF AML compliance at a required scale.