FATF Grey List Shakeup: Laos and Nepal In, Philippines Out

The FATF’s latest grey list update is reshaping financial compliance priorities across Asia, with Laos and Nepal in—and the Philippines out.

Announced in February 2025, this high-stakes shift underscores a growing focus on risk governance, transparency, and regulatory enforcement—particularly in rapidly developing economies.

Whether you’re a compliance lead, fintech founder, or risk officer in APAC, this change raises critical questions: What triggered these decisions? What lessons can be learned from the Philippines’ exit? And how should institutions recalibrate their AML strategies in light of FATF’s evolving lens?

In this article, we break down what the latest grey list update means, how it impacts financial institutions, and how you can stay ahead of the next jurisdictional shift.

What Is the FATF Grey List?

The FATF grey list, officially called the list of jurisdictions under increased monitoring, highlights countries that are actively working with FATF to address strategic deficiencies in their AML/CFT (Anti-Money Laundering and Countering the Financing of Terrorism) regimes.

Greylisting doesn’t mean a country is unsafe or non-cooperative. Instead, it indicates that a jurisdiction has weaknesses in its AML/CFT systems but has committed to resolving them within a set timeframe under FATF supervision.

What Are the Impacts of Greylisting?

• De-risking by global banks and investors

• Tighter scrutiny for cross-border transactions

• Higher due diligence requirements for financial institutions

• Damage to the country’s financial credibility and access to funding

Why Laos and Nepal Were Added in 2025

Laos: Emerging Market, Growing Risk

Laos has seen increased digitisation in its financial sector, but it remains vulnerable to cross-border financial crime, particularly through informal value transfer systems and loosely regulated sectors.

FATF Likely Flagged:

• Inadequate regulation of Virtual Asset Service Providers (VASPs)

• Weak Suspicious Transaction Reporting (STR) frameworks

• Limited transparency around beneficial ownership

• Cross-border risks linked to trade, casinos, and real estate

Nepal: Informality Meets Inattention

Nepal’s dependence on informal remittance corridors and a cash-heavy economy make it a prime candidate for enhanced monitoring.

FATF Concerns Likely Included:

• Weak enforcement of Customer Due Diligence (CDD) standards

• Lack of oversight for DNFBPs (Designated Non-Financial Businesses and Professions)

• Outdated regulatory enforcement and weak supervision

• Poor implementation of targeted financial sanctions

Both countries must now implement time-bound action plans and undergo closer scrutiny from international partners.

The Philippines: From Greylisted to Compliant

After being added to the FATF grey list in June 2021, the Philippines was officially removed in February 2025, following significant improvements across legislation, supervision, and enforcement.

What the Philippines Got Right:

• Established the National Anti-Money Laundering Coordinating Committee (NACC)

• Strengthened AML laws, including the Anti-Terrorism Act of 2020 and FIST Act

• Boosted monitoring of offshore gaming operators, MSBs, and DNFBPs

• Deployed regtech and AI-driven solutions for transaction monitoring

The Philippines' removal demonstrates that FATF listing can be a powerful motivator for change—and that exit is achievable with cross-sector collaboration.

Why This Matters for Financial Institutions

Whether or not your institution operates in Laos, Nepal, or the Philippines, FATF updates are a reminder of the global nature of compliance risk.

Key Impacts:

• Enhanced Due Diligence on clients and transactions involving greylisted jurisdictions

• Recalibration of Risk Scoring Models to reflect changes in country risk profiles

• Correspondent Banking Disruption, especially for cross-border remittances

• Increased Reporting and documentation obligations for flagged activity

Tookitaki's Role in Navigating Greylist Complexity

At Tookitaki, we help financial institutions stay ahead of evolving compliance obligations through intelligent, scalable technology that adapts to FATF expectations.

Our Platform: FinCense

• Scenario-Based Transaction Monitoring with real-time country risk adjustments

• AI-Driven Alert Optimisation to reduce false positives and highlight high-risk activity

• Built-In Typologies contributed by AML experts from across the AFC Ecosystem

• Cross-Border Risk Mapping that flags exposure to greylisted jurisdictions

Whether you operate in a FATF-listed country or do business with one, Tookitaki enables faster response, better decision-making, and audit-ready compliance.

Lessons from the FATF Grey List Shakeup

For Compliance Teams:

• Update transaction monitoring rules to reflect FATF changes

• Train analysts on new jurisdictional risks

• Use country risk as a dynamic input in risk scoring and alert escalation

For Regulators and Policymakers:

• Benchmark against the Philippines' success story

• Embrace regtech solutions that support real-time adaptation

• Encourage cross-border collaboration and data sharing

Conclusion: Real-Time Compliance for a Real-Time World

The FATF grey list is a dynamic reminder that compliance is not static. With Laos and Nepal now under watch and the Philippines proving that reform is possible, the pressure is on for institutions to respond quickly and proactively.

Tookitaki's technology was built to power that response—turning complex risk into actionable intelligence, and regulatory pressure into an opportunity to lead.

In a world where reputation, trust, and regulation intersect, smart compliance isn't just about avoiding penalties. It's about enabling financial institutions to thrive in the face of uncertainty.

Stay ahead. Stay trusted.