An exclusive article by Fred Kahn

The European Union’s anti-money laundering (AML) high-risk third-country list, often referred to as the “grey list,” is a central tool in the bloc’s fight against international financial crime. The latest update, published by the European Commission on June 10, 2025, marks a significant reshaping of the compliance landscape for both member states and financial institutions worldwide. Shifts in and out of the EU list always attract attention from regulators, banks, multinational corporations, and compliance professionals. This article explores the recent movements on the list, the criteria and process behind these decisions, and the direct and indirect impacts on the broader fight against money laundering and terrorism financing.

EU high-risk list: criteria and regulatory basis

The EU high-risk third-country list is designed as a risk management instrument, directly tied to the requirements of the EU’s Anti-Money Laundering Directive (Directive (EU) 2015/849, as amended). Under Article 9 of this Directive, the European Commission is required to identify third countries with strategic deficiencies in their AML/CFT frameworks that pose significant threats to the financial system of the Union. When a country is added to the list, all obliged entities, including banks, payment institutions, and virtual asset service providers, must apply enhanced due diligence to business relationships and transactions involving these jurisdictions.

The European Commission’s methodology closely aligns with the Financial Action Task Force (FATF) standards and evaluations. The Commission periodically reviews developments in the FATF’s list of “jurisdictions under increased monitoring,” commonly referred to as the FATF grey list, and integrates these changes after independent assessment and consultation with the European Banking Authority (EBA), Europol, and other stakeholders.

Being listed by the EU has immediate operational implications. Financial institutions must apply rigorous customer due diligence, conduct detailed source of funds and source of wealth checks, scrutinize cross-border transactions more closely, and often report any unusual activity related to clients from listed countries. Additionally, legal, auditing, and consulting professionals need to monitor and adjust compliance programs to ensure alignment with the latest regulatory requirements.

Recent additions to the EU grey list

The most recent update to the EU high-risk list, reflecting FATF developments up to February 2025 and subsequent Commission analysis, brought several new jurisdictions under enhanced scrutiny. Countries newly added to the EU list in June 2025 are Monaco, Algeria, Angola, Côte d’Ivoire, Kenya, Laos, Lebanon, Namibia, Nepal, and Venezuela. Each of these countries was recently subject to FATF review and placed under increased monitoring due to a combination of legal, institutional, or operational weaknesses in their AML/CFT regimes.

Monaco’s inclusion reflects rising concerns around the oversight of private banking and high-value transactions, as identified by international assessment teams. Algeria and Angola were added in recognition of longstanding gaps in cross-border financial controls and limited effectiveness in preventing predicate offenses. Côte d’Ivoire and Kenya faced scrutiny for insufficient supervision of their banking and fintech sectors, especially around the risks posed by cash-intensive businesses and new payment technologies.

Laos and Nepal were both added following mutual evaluations that found deficiencies in beneficial ownership transparency and reporting standards. Lebanon’s listing comes amid ongoing political and economic turmoil, impacting the country’s ability to implement robust AML/CFT measures and demonstrating a deterioration in compliance since previous assessments. Namibia and Venezuela were both flagged for systemic weaknesses in supervision, law enforcement, and cooperation with international counterparts.

For each of these jurisdictions, listing triggers a heightened level of due diligence from EU-based financial institutions, complicating cross-border business and raising the cost of compliance for companies with legitimate exposure to these economies.

Countries removed from the EU high-risk list

At the same time, the EU removed several countries from the high-risk list, reflecting improvements in their AML/CFT frameworks and the closure of long-standing gaps. As of June 2025, Barbados, Gibraltar, Jamaica, Panama, Philippines, Senegal, Uganda, and the United Arab Emirates (UAE) are no longer considered high-risk by the EU. Each removal follows a detailed review process, including confirmation that these jurisdictions have addressed FATF action plans and demonstrated sustained effectiveness in risk mitigation.

The UAE, in particular, invested heavily in reforming its supervisory systems, implementing tighter controls on real estate transactions, and improving suspicious activity reporting. The Philippines and Panama both worked extensively with FATF and regional bodies to strengthen beneficial ownership rules and enhance cooperation between law enforcement agencies and financial institutions. Barbados and Jamaica, as well as Gibraltar, demonstrated sustained efforts to address vulnerabilities identified in previous mutual evaluations, leading to their eventual delisting.

For financial institutions, these removals can reduce compliance burdens for cross-border transactions, although a period of heightened vigilance typically follows to ensure reforms remain effective. Even after removal, the European Commission continues to monitor progress, and further re-listings remain possible if countries backslide.

Broader implications for the global AML landscape

Movements in and out of the EU high-risk list have a ripple effect far beyond European borders. The alignment of the EU list with FATF’s global standards means that changes are often mirrored in other regions, amplifying the impact for businesses with operations or clients in newly listed or delisted jurisdictions.

For countries added to the list, there are immediate and sometimes severe consequences for banking relationships. EU-based banks and payment providers may scale back services, close correspondent accounts, or impose higher fees to manage compliance risks. Multinational corporations, particularly those in trade finance, remittances, and real estate, must conduct rigorous risk assessments to determine whether continued engagement is feasible or commercially viable.

For the countries removed from the list, there is often a period of renewed optimism, as access to international banking and investment flows is restored. However, the process is rarely immediate or uniform. Many financial institutions retain their own internal risk lists, which may not always align perfectly with the EU’s designations. Additionally, regulators in other regions, such as the United States or Asia-Pacific, may maintain parallel high-risk country lists with different criteria and timelines.

From a compliance perspective, each movement on the list presents new challenges for banks and obliged entities. Enhanced due diligence requirements necessitate continual updates to internal policies, staff training, monitoring technology, and client outreach. As the regulatory environment becomes more complex, technology-driven solutions—such as dynamic risk scoring, AI-driven transaction monitoring, and automated screening—are increasingly vital to ensure timely and cost-effective compliance.

The process behind EU list updates

The European Commission’s update process involves several distinct steps. It starts with an initial FATF evaluation, followed by detailed internal assessment by the Commission’s Directorate-General for Justice and Consumers. The Commission consults with the EBA, Europol, and other agencies before drafting amendments to the relevant regulation. This draft is then submitted to the European Parliament and Council, which have one month to object. If there is no objection, the updated list enters into force, typically within two months of the original FATF announcement.

The process is designed to balance rapid response to emerging risks with the need for legal certainty and transparency. Stakeholder consultations, public feedback, and technical analyses are integral to the Commission’s approach, helping to ensure that changes are evidence-based and aligned with evolving money laundering typologies.

The impact on financial institutions and regulated sectors

For financial institutions operating within the EU, the high-risk third-country list is more than a regulatory checklist; it shapes business strategy, client relationships, and even the selection of international partners. When a new country is added, compliance departments must immediately review all active and prospective clients from the jurisdiction, update internal risk assessments, and potentially notify management of new exposures.

In some cases, financial institutions may decide to de-risk entirely, exiting relationships that are no longer commercially viable given the heightened compliance costs and risks. Others may invest in enhanced monitoring tools and specialist staff to maintain business while satisfying regulatory obligations. For law firms, consulting practices, and technology vendors, every update to the EU list is an opportunity to offer new products and services, from compliance program reviews to transaction monitoring upgrades.

Regulated non-financial sectors, such as real estate, casinos, and professional services, are also directly affected by these developments. Real estate professionals, for example, must scrutinize buyers and sellers from newly listed countries to a much greater extent, while accountants and lawyers handling cross-border transactions must ensure they do not inadvertently facilitate money laundering.

Regional and global reactions to EU list changes

When the EU updates its list, reactions are swift and varied. Countries added to the list often respond by announcing new reforms or seeking technical assistance from FATF or EU member states. Some countries contest their listing, citing domestic progress or differences in risk assessment methodologies. In certain cases, affected jurisdictions have initiated legal or diplomatic campaigns to challenge the EU’s designation.

Multilateral organizations, including the International Monetary Fund and the World Bank, often use the EU and FATF lists as reference points when designing technical assistance programs or assessing the effectiveness of AML/CFT regimes. The synchronization of lists across major jurisdictions helps to standardize global compliance expectations, though disparities can persist due to local political or economic considerations.

Conclusion: dynamic evolution of the EU AML high-risk list

Movements in and out of the EU high-risk list for AML/CFT concerns reflect the dynamic and evolving nature of the fight against global financial crime. The latest update from June 2025 demonstrates both the progress made by several jurisdictions in reforming their compliance frameworks and the persistent challenges faced by others in addressing systemic vulnerabilities.

For financial institutions, regulators, and compliance professionals, staying current with EU list changes is a non-negotiable requirement for effective risk management. The integration of technological solutions, ongoing staff training, and robust client due diligence are all essential for meeting heightened regulatory expectations. As international coordination grows stronger, movements on the EU list will continue to influence the direction of global AML efforts, shaping risk assessments, compliance priorities, and cross-border business for years to come.

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Related Links

• European Commission – High-Risk Third Countries
• Directive (EU) 2015/849 (EU AMLD4) as amended
• FATF – Jurisdictions under Increased Monitoring
• European Banking Authority – AML/CFT Guidelines
• European Financial and Economic Crime Centre – EFECC

Other FinCrime Central Articles About EU’s Grey-Listing

• EU Flags Lebanon as High-Risk in Ongoing Fight Against Money Laundering
• EU Push to Grey List Monaco Triggers Unprecedented Scrutiny for Investors
• The UAE’s AML Transformation: From High-Risk to Trusted Financial Hub
• Unlocking the Power of Enhanced Due Diligence for High-Risk AML Scenarios

Some of FinCrime Central’s articles may have been enriched or edited with the help of AI tools. It may contain unintentional errors.

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