Greylisted and Red Flags: What FATF listings really achieve
A summary of the recent FATF outcomes, and a sneak peak at empirical analysis on the impact and outcomes of FATF greylistings.
Over the weekend, you’ll have likely seen lots of talk on social media about the FATF’s updated grey list (jurisdictions under increased monitoring) and what it means for those countries. Today, I’m going to do something a bit different: talk about those countries and what it means, but also share some new research on what the FATF’s grey list achieves (or doesn’t) in our fight against terrorism and terrorist financing. At a time when global resources are stretched thin by competing priorities and a reordering of the international system, it’s important to think critically about organizations, standards, and systems, and whether they are making the world a safer and fairer place. This is particularly true as the G7 prepares to meet, since the FATF originally emerged from G7 communiqués, and if any group of countries can support more research into what the FATF standards achieve, it’s this one. And yes: this article needs an 🚨 empirical data alert! 🚨
Outcomes of the FATF Meeting
Last week, the Financial Action Task Force (FATF), the global standard-setter for anti-money laundering and counterterrorist financing, released its updated list of jurisdictions under increased monitoring, commonly known as the grey list, and those identified as high-risk and subject to a call for action, more commonly referred to as the blacklist. These designations aren’t just bureaucratic labels; they have real implications for countries’ financial sectors, global investment flows, and geopolitical reputations.
To learn more about those impacts, have a read of this book chapter I wrote a few years ago.
Tanzania and Croatia were removed from the grey list after 2.5 years, while Mali was removed after 3.5 years. The UK Virgin Islands were placed on the list for the first time, and Bolivia was grey listed for the second time (the first was in 2011). Over the course of the list’s existence, 87 countries have been listed, some of them multiple times.
A continent-by-continent analysis reveals that Africa dominates the list with 12 countries, followed by 4 from the Middle East, 5 from Asia, and 4 from the Americas. Only three countries on the entire list — Bulgaria, Monaco, and the British Virgin Islands— are part of the Global North.
This geographic breakdown matters. FATF listing disproportionately affects countries in the Global South, highlighting a persistent tension in global financial governance. While the FATF emphasizes technical compliance and effectiveness in anti-money laundering and counterterrorist financing frameworks, the designations carry significant political and economic weight. Being grey- or black-listed can reduce access to international banking systems, raise the cost of capital, and trigger de-risking by international financial institutions.
As more countries from the Global South find themselves under FATF scrutiny, questions arise about equity in the global financial system and the capacity of lower-income countries to implement complex regulatory frameworks. At the same time, the listings serve as a reminder that illicit finance is a global challenge that transcends regions and political systems. Compliance isn’t just about checking boxes, but about building resilient and transparent financial institutions.
So does it work?
As part of my work for my PhD,1 I conducted a series of large data analyses looking at levels of terrorism in countries around the world (“levels of terrorism” was defined as the number of terrorist attacks each year, as well as the number of people killed and injured). To assess the impact of FATF grey and blacklisting on terrorism, I used a negative binomial regression (a statistical method designed to model count data, like the number of terrorist incidents in a country). This type of regression is ideal when the data shows high variability, meaning some countries experience very few attacks while others experience many. Negative binomial regression accounts for this uneven distribution, making it a good fit for analyzing patterns in terrorism.
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In the model,2 I included FATF listing status as a variable (amongst a half dozen others),3 lagged by three years.4 This lag accounts for the time it typically takes for technical assistance and other remedial measures triggered by FATF listing to take effect. The results show that even three years after being placed on a FATF list, countries continue to experience increasing levels of terrorism. This raises important questions about the effectiveness of FATF-driven reforms at enhancing global security. There are a number of possible explanations (I will explore these when I publish my book based on my dissertation), and this by no means suggests that we should abandon the FATF process. Instead, while these findings are preliminary, they provide a valuable starting point for evaluating whether FATF listings result in meaningful security improvements.
These findings underscore the importance of seeking empirical evidence about the real-world impacts of global anti-money laundering and counter-terrorist financing (AML/CTF) policies. While FATF listings are designed to pressure countries into compliance, we still know surprisingly little about whether those efforts actually reduce threats like terrorism and money laundering. This analysis isn’t the final word—it’s a starting point. By grounding future discussions in data and measurable outcomes, we can move beyond assumptions and begin to ask harder questions: What works, what doesn’t, and why? As the global community continues to refine its AML/CTF strategies, it’s critical that we base those efforts on evidence, not just expectations.
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This research won both the SSHRC Impact Talent Award and the Carleton University Medal for Outstanding Doctoral Research. It will be published as a book in 2026.
There are actually 8 models across two different datasets, and the results were statistically significant in 7/8 of the models.
These variables included: the year that the country signed the International Convention for the Suppression of Terrorist Financing, if the regime was autocratic, the country’s regulatory quality (World Bank data), the remittances the country receives as a proportion of GDP (more World Bank data), an interact variable, and a lagged attack variable.
This data was generously shared by Julia Morse, author of The Banker’s Blacklist, a must-read book. I updated the data to 2018.