By Paul O’Donoghue, Senior Correspondent
The FATF has revealed major changes for how jurisdictions will be added to the organization’s grey-list.
The biggest change is that countries below a $10 billion income threshold will not be grey listed in most circumstances.
The change will mean that poorer countries will be less likely to get the designation, which sees them placed under special scrutiny due to money laundering or terrorist financing concerns.
Elisa de Anda Madrazo, the newly-appointed president of the Financial Action Task Force, said the new measure will likely cause a significant reduction in the number of ‘grey-listed’ jurisdictions.
After delivering the Opening Address at the ‘International Anti-Financial Crime Summit 2024’, de Anda revealed that the changes are expected to be formalized “in a couple of weeks”.
“If you’re a low income jurisdiction as defined by the IMF – if your income is below $10 billion – you won’t go into identification,” she told the conference.
“Unless, other jurisdictions by consensus determine that this is a high-risk jurisdiction.”
De Anda said the move was aimed at avoiding penalizing lower income countries.
Being greylisted often causes a country to face problems such as lower international investment, or issues with borrowing from international markets.
The FATF boss said the change would mean that many jurisdictions which are currently on the grey list would no longer meet the criteria.
““We estimate a reduction of 47% in the number of countries being listed,” de Anda said.
“It means that many jurisdictions which have their challenges, but are not intricate to the financial system, won’t have to struggle with an identification that brings its own consequences,” de Anda said.
However, de Anda said that standards were being raised for the 40 jurisdictions which are full FATF member states. These consist mostly of larger and wealthier nations, such as the U.S. most EU countries, the UK, Japan and Singapore.
“If you’re a FATF member country and you meet the criteria for [grey list] referral, you will automatically enter the process,” she said.
“A shorter observation period would be available to FATF members, as compared to low-capacity countries.”
“This is raising the bar for the membership and holding ourselves accountable.”
Countries which are above the “$10 billion threshold”, but which are in “high debt distress” or are still recognised as a poorer jurisdiction, will also get extra time before being grey listed.
“You will have double the time before being identified – 24 months instead of 12,” de Anda said.
The FATF President said the changes are being fine-tuned and are expected to be finalized “in a couple of weeks”.
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