FATF Plenary Update: Country Risk, Fraud and Compliance Expectations

On Friday June 19, the Financial Action Task Force (FATF) concluded its sixth and final Plenary under the Mexican Presidency of Elisa de Anda Madrazo, agreeing a broad set of measures aimed at strengthening the global response to money laundering, terrorist financing, proliferation financing, fraud and the misuse of emerging technologies.

The Plenary brought together delegates from across the FATF Global Network of more than 200 jurisdictions and observers. Discussions focused on evolving threats to financial integrity, the effectiveness of national AML/CFT/CPF (Anti-Money Laundering / Countering the Financing of Terrorism / Countering Proliferation Financing) frameworks, the increasing importance of public-private cooperation, and the need for stronger controls around payments, virtual assets, digital platforms and alternative value transfer systems.

Key outcomes from the Plenary

A central outcome of the Plenary was the update to the FATF lists of monitored jurisdictions. Bosnia and Herzegovina and Iraq were added to the list of jurisdictions under increased monitoring, commonly referred to as the FATF Grey List. These jurisdictions have committed to working with the FATF and their respective regional bodies to address identified strategic deficiencies within agreed timeframes.

At the same time, Algeria and Namibia were removed from the Grey List following successful on-site visits. FATF confirmed that both jurisdictions have completed their agreed action plans and demonstrated sufficient progress in addressing deficiencies in their AML/CFT/CPF regimes. They will continue to work with their respective FATF-style regional bodies to sustain these improvements.

The FATF also confirmed that jurisdictions subject to a Call for Action, often referred to as the Black List, remain a key focus due to serious strategic deficiencies that present risks to the international financial system.

Mutual evaluations: Canada and Türkiye

The Plenary adopted the mutual evaluation reports for Canada and Türkiye under the new evaluation round. These reports assess both technical compliance with the FATF Recommendations and the effectiveness of national AML/CFT/CPF frameworks.

The reports are expected to be published in September–October 2026 following the FATF Global Network’s quality and consistency review. Under the new round of mutual evaluations, assessed countries receive a timebound roadmap of key recommended actions, designed to improve effectiveness within a three-year period.

For obliged entities, these reports will be important once published, as they may influence internal country risk assessments, correspondent banking considerations, enhanced due diligence triggers and supervisory expectations.

Humanitarian exemptions and sanctions implementation

The FATF updated Recommendation 6 to ensure that targeted financial sanctions do not unintentionally prevent the flow of funds, assets, resources, goods and services necessary for humanitarian assistance and basic human needs.

The changes incorporate humanitarian exemptions contained in relevant United Nations Security Council resolutions, including UNSCR 2664 and UNSCR 2761, relating to the prevention and suppression of terrorism and terrorist financing.

This is a significant development for institutions involved in sanctions screening, transaction monitoring and humanitarian-related payments. Firms should ensure that sanctions controls remain robust while also allowing for appropriate handling of legitimate humanitarian activity, in line with applicable legal and regulatory requirements.

Strategic initiatives: fraud, payments, digital platforms and virtual assets

The Plenary approved several new publications and initiatives intended to help countries and the private sector respond to emerging criminal methods.

A major focus was public-private partnership and information sharing. FATF approved a new global overview of public and private sector partnerships and data protection arrangements, expected to be launched next month. This work reflects the growing recognition that combating financial crime requires actionable intelligence sharing, while respecting data protection and privacy obligations.

FATF also approved a public consultation on new guidance for the implementation of the strengthened Recommendation 16 on cross-border payment transparency. This guidance is expected to support financial institutions and countries in improving the transparency of payments, particularly in relation to money laundering, terrorist financing, proliferation financing and fraud.

The Plenary further addressed the misuse of social media, instant messaging applications and streaming platforms for terrorist financing. FATF approved a publication focused on detecting and disrupting terrorist financing activity through these channels, highlighting the importance of proactive engagement with technology and platform providers.

Additional work was approved on underground banking, hawala and similar service providers, with a report expected in September 2026. FATF also agreed to update its understanding of illicit finance risks in the casino and broader gambling sector, particularly as online, cross-border and multi-payment gambling models continue to expand.

Virtual assets, VASPs and DeFi remain under scrutiny

The virtual asset sector remains a key FATF priority. The Plenary approved the seventh targeted update on the implementation of FATF Standards for virtual assets and virtual asset service providers.

FATF also approved a new targeted report on decentralised finance, focusing on regulatory challenges and the exposure of DeFi platforms to money laundering, terrorist financing and proliferation financing risks. These publications are expected next month.

For financial institutions, fintechs, payment firms and crypto-exposed businesses, this signals continued regulatory pressure to strengthen controls around customer due diligence, wallet and counterparty screening, transaction monitoring, travel rule compliance and risk-based supervision of virtual asset activity.

Incoming UK Presidency priorities

The Plenary also marked the transition towards the incoming UK Presidency, led by Giles Thomson, for the period 1 July 2026 to 30 June 2028.

The UK Presidency will focus on three key themes:

• Strengthening the global response to the fraud epidemic, including risks linked to scam compounds

• Improving implementation of the risk-based approach and risk-based supervision

• Enhancing information sharing and public-private partnerships

This direction is highly relevant for obliged entities. Fraud is increasingly converging with money laundering, cybercrime, human trafficking, mule networks and cross-border organised crime. Firms should expect supervisors to place greater emphasis on integrated fraud and AML controls, typology-led monitoring, intelligence sharing and demonstrable effectiveness.

Impact on cleversoft’s Country Risk Scoring

Following the FATF Plenary outcomes, we conducted a review of our country risk matrix to determine the impact of the latest jurisdictional developments on our internal country risk ratings. The assessment considered the FATF list changes alongside broader residual risk indicators, including sanctions exposure, corruption risk, beneficial ownership transparency, supervisory effectiveness, sectoral vulnerabilities, transaction flows and overall internal risk appetite.

As a result of this review, Namibia has been reclassified from High to Medium risk, reflecting its removal from increased monitoring and the progress made in addressing previously identified AML/CFT/CPF deficiencies. Algeria remains rated High, despite its removal from the FATF Grey List, as residual risk factors continue to support a higher risk classification under our methodology.

For jurisdictions added to increased monitoring, Bosnia and Herzegovina was already rated High and remains High, while Iraq also remains rated High. These ratings reflect continued jurisdictional risk exposure and the need for enhanced due diligence, closer monitoring of customer and counterparty relationships, and heightened scrutiny of transactions linked to these jurisdictions.

These updated risk ratings are reflected now in our FinCrime solutions providing jurisdictional risk scores, ensuring the revised country risk values are applied consistently across the relevant processes.

This outcome underlines that FATF list changes are an important input into country risk scoring, but should not be applied mechanically. Internal country risk assessments should continue to reflect a combination of FATF status, national AML/CFT/CPF effectiveness, sanctions and geopolitical considerations, financial crime exposure, and the institution’s own risk appetite.

cleversoft Services

cleversoft’s Financial Crime Prevention Suite helps firms identify, assess and manage jurisdictional risk exposure in line with evolving FATF outcomes, sanctions developments and supervisory expectations. Our solutions support dynamic country risk scoring, automated customer due diligence and enhanced due diligence workflows, and screening of customers and transactions against sanctions, high-risk jurisdictions and other risk indicators.

By combining regulatory intelligence, configurable risk models, workflow automation and auditable decision-making, cleversoft enables financial institutions to translate FATF updates into actionable controls, maintain a consistent risk-based approach and demonstrate effective management of jurisdictional exposure to regulators and internal stakeholders.

Want to learn how these developments impact your organisation? Get in touch with our experts to discuss how cleversoft can support your financial crime compliance strategy.