Understanding the FATF Grey List

The question asks about countries that were recently placed on the 'Grey List' by the Financial Action Task Force (FATF). The FATF is an intergovernmental organization established in 1989 to combat money laundering, terrorist financing, and other related threats to the integrity of the international financial system.

What is the FATF Grey List?

The FATF maintains two lists:

• The Black List: Officially known as "High-Risk Jurisdictions Subject to a Call for Action". These are countries with significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.
• The Grey List: Officially known as "Jurisdictions under Increased Monitoring". These are countries that are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering and terrorist financing. Being on this list indicates a country has committed to resolve quickly the identified strategic deficiencies within agreed timeframes.

Countries on the Grey List face increased scrutiny from the international financial community and may face challenges in international financial transactions and investments.

Recent Additions to the Grey List

Based on decisions made by the FATF, several countries are reviewed periodically for their compliance with anti-money laundering and counter-terrorist financing (AML/CFT) standards. In a significant development in October 2021, both Turkey and the United Arab Emirates (UAE) were added to the FATF Grey List.

These countries were placed on the list because the FATF identified strategic deficiencies in their respective AML/CFT frameworks. By being listed, Turkey and UAE formally committed to implementing action plans to address these deficiencies and strengthen their systems to prevent financial crimes.

Analyzing the Options

Let's look at the options provided in the question:

• Bolivia and Mozambique: While Mozambique was added to the Grey List later (in 2022), Bolivia was not among the countries recently added alongside Turkey and UAE in the specified timeframe.
• Colombia and Ecuador: Neither Colombia nor Ecuador were added to the Grey List in the same timeframe as Turkey and UAE.
• Iraq and Qatar: Iraq has been on and off the Grey List in the past but was not added alongside Turkey and UAE. Qatar has generally maintained a status outside these lists.
• Turkey and UAE: As discussed, Turkey and the United Arab Emirates were indeed placed on the FATF Grey List in October 2021, based on identified deficiencies in their AML/CFT regimes.

Therefore, the pair of countries recently placed on the FATF 'Grey List' among the given options is Turkey and UAE.

Revision Table: Key FATF Terms

Additional Information on FATF and Listing

The process for a country being listed by the FATF involves mutual evaluations, where a country's compliance with the FATF Recommendations is assessed. If significant deficiencies are found, the country may be placed on the Grey List. Inclusion on the Grey List triggers closer monitoring by the FATF and requires the country to implement a specific action plan within a set timeframe. Successfully completing the action plan can lead to the country being removed from the Grey List.

Being on the Grey List is not a sanction, but it does signal to the global financial system that a country has weaknesses in its AML/CFT controls, which can affect investor confidence and transaction costs.