A proliferation of lists?

For some years, the FATF has published various lists of countries with “strategic AML/CFT deficiencies”. These have become known in the trade as the ‘black’ list (jurisdictions subject to a call for counter-measures – Iran and North Korea feature on this list), the ‘dark grey’ list (jurisdictions that have not made sufficient progress or not committed to an action plan) and the ‘light grey’ list (those who have developed an action plan). The lists are drawn up by the FATF’s International Cooperation Review Group (ICRG) and approved by the FATF plenary meetings. The content of the lists are often used as part of country-risk assessments, although the correlation between a weak AML/CFT regime, in FATF terms, and actual ML/TF risk is a topic for another day. The AML/CFT authorities in other jurisdictions often re-publish these FATF announcements, and in some cases they are specifically mentioned in laws or regulations.

The Caribbean FATF (CFATF), the FATF-style regional body (FSRB), has been meeting in plenary session in Nicaragua this week. Yesterday (30 May 2013), they published their own lists, which use very similar language to the FATF public statements. Belize and Guyana appear on the ‘dark grey’ equivalent and Dominica on the ‘light grey’ version. There are key differences, though – the CFATF public statement suggests that if further progress is not made, the next step will be to refer countries on the ‘dark grey’ list to the FATF ICRG, for consideration of listing by the FATF.

Do we need any more lists? On the one hand, it is perhaps a useful thing for the FSRBs to use their greater knowledge and understanding of the situation in their region to identify those countries that are not making sufficient progress. On the other hand, the CFATF statement (which was immediately re-published without further comment by the FATF) appears to establish a hierarchy of such lists, which goes against the ethos that the FATF Standards should be applied equally across all jurisdictions. There are CFATF countries already on the FATF lists that are not included in the CFATF statement – are the strategic deficiencies in those countries to be taken to be more serious than those listed only by the CFATF? Should only countries and institutions in the CFATF region be expected to take account of the CFATF lists, or should they be taken acocunt of globally, but allocated a lower risk rating than those listed by the FATF? That would seem a high risk strategy for institutions to take, but we shall watch with interest to see what regulators make of this new listing.