FATF is an intergovernmental agency housed by the Organisation for Economic Cooperation and Development in Paris. It was set up as a task force in July 1989 at the G7 Summit in Paris. FATF operates in accordance with its Mandate and High-Level Principles in collaboration with FATF-Style Regional Bodies (FSRBs). FATF is often referred to as a ‘Global Network’ of more than 200 jurisdictions. It brings together representatives from its 40 executive member nations, two regional organisations (the Gulf Cooperation Council and the European Commission), nine FSRBs,[1] and a large observer organisations. Since its establishment, South Africa is the only country from Africa to have been admitted to FATF executive membership. Decision-making is consensus-based. The Plenary is the ultimate authority on all technical issues, meets three times a year in Paris and has the power to overrule mutual evaluation findings by consensus.
Three signals emerged from the Plenary in Mexico City:
- First, risks are shifting toward fraud and digital financial channels.The Plenary highlighted cyber-enabled fraud and regulatory challenges associated with offshore Virtual Asset Service Providers (VASPs), stablecoins, and un-hosted wallets. These are no longer peripheral technology concerns but central AML/CFT risks. Recent FATF research on fraud and money-laundering risks indicates that around 90% of assessed jurisdictions now identify fraud as a major money-laundering threat, making it one of the largest generators of illicit proceeds globally.
- Second, the grey list remains dynamic.The Plenary added Kuwait and Papua New Guinea to the list of jurisdictions under increased monitoring, reinforcing that compliance scrutiny continues to widen geographically.
- Third, evaluations are increasingly focused on outcome.FATF mutual evaluations now focus on whether countries can demonstrate sustained investigative, prosecutorial, and confiscation outcomes—not simply the adoption of compliant legislation. Africa’s recent experience revealed that modern AML/CFT laws have not insulated countries from grey listing or as jurisdictions under increased monitoring. Increasingly compliance ratings will be determined by operational effectiveness as FATF shifts towards effectiveness based on “Proportionality Test” Rather than “Commensurate with Risks”. FATF’s revised framework for the fifth round of mutual evaluation reflects a demand for credible institutional output:
Risk understanding → Supervision → Intelligence → Investigation → Prosecution → Confiscation → Deterrence indicators underpinned by data.
Fraud, Digital Finance, and Emerging Risks
The Plenary placed cyber-enabled fraud at the center of global AML/CFT risk.
Digital financial systems, including instant payments, fintech infrastructure, digital identity manipulation, and cross-border transfers, have accelerated the scale and speed of fraud schemes. Increasingly, fraud and money laundering are structured together from the outset through mule networks, nominee accounts, shell entities, and rapid fintech transfers.
For Africa, where mobile money and fintech adoption have expanded rapidly in several markets, this development is particularly significant. Funds can move across multiple intermediary accounts within minutes, often outpacing investigative triggers. Strategies to counter cyber-enabled fraud must therefore be integrated into:
- National risk assessments
- Supervisory inspection frameworks
- Suspicious transaction reporting systems
- Asset tracking and freezing mechanisms
Virtual Assets and Regulatory Arbitrage
FATF’s growing emphasis on offshore Virtual Asset Service Providers reflects a key vulnerability: digital asset services can operate across borders without meaningful supervision in the jurisdictions they serve. The FATF Guidance on Virtual Assets and VASPs outlines regulatory expectations, including the implementation of the Travel Rule and the effective oversight of digital asset service providers.
Asset Recovery and Technological Capacity
Asset recovery is increasingly viewed as a decisive indicator of AML/CFT effectiveness. Rapid payment suspension mechanisms, non-conviction-based confiscation, and accelerated international cooperation are now central enforcement tools. International initiatives such as the World Bank–UNODC Stolen Asset Recovery (StAR) Initiative support countries in tracing and recovering illicit assets. In digital fraud cases, time—not law—is often decisive. If funds are not frozen quickly, recovery becomes improbable. At the same time, FATF’s emphasis on machine-learning detection models, real-time payment monitoring, and advanced analytics signals a broader shift: manual and paper-based supervisory systems will increasingly be insufficient. With FATF’s Guidance and amendments to Recommendations 4 and 38, as well as the interpretative notes, countries are expected to do much more as they prepare for the next round of mutual evaluations.
Grey-Listing and Institutional and Capacity Constraints in Africa
Due to strategic deficiencies identified in their AML/CFT regimes, a third of African countries were added to the FATF “grey list”, otherwise known as Jurisdictions under Increased Monitoring. Of the 54 African states, 22 were grey-listed under the fourth round of mutual evaluations. As of February 2026, 14 countries have been delisted, while eight remain on the list. The remaining countries include South Sudan, the Democratic Republic of Congo, Cameroon, Namibia, Algeria, Angola, Côte d’Ivoire, and Kenya. Although FATF does not publish sanctions against grey-listed countries, they were either excluded from international financial markets or sanctioned through Financial Advisories published by the USA and the European Commission. As set out below, these countries spent an average of 3 years, leading to grave economic consequences:
- Burkina Faso: February 2021 – October 2025
- Mali: October 2021 – June 2025
- Uganda: February 2020 – February 2024
- Morocco: February 2021 – February 2023
- South Africa: February 2023 – October 2025
- Nigeria: February 2023 – October 2025
For Africa, this is significant. It intersects with the continent’s repeated exposure to FATF grey-listing, structural economic vulnerabilities, and the ongoing challenge of translating formal compliance frameworks into credible and integrated financial integrity systems. Several operational constraints repeatedly emerged from mutual evaluation reports of more than 22 countries in the fourth round of evaluations, namely:
- Incomplete or inaccessible beneficial ownership transparency
- Weak supervision of designated non-financial businesses and professions (DNFBPs)
- Failure to convert Financial Intelligence Units (FIUs) intelligence reports into credible investigations and prosecutions
- Failure to act “without delay” on targeted financial sanctions.
- Confiscation outcomes that do not reflect the scale of financial crime risks.
Additionally, across Africa, regulatory frameworks for virtual assets remain uneven. Some jurisdictions operate licensing regimes, while others rely on guidance or partial oversight. These differences create regulatory arbitrage opportunities where illicit actors route transactions through weaker jurisdictions before integrating funds elsewhere. In many cases, these weaknesses reflect resource constraints, capacity and institutional challenges rather than unwillingness to comply with FATF Recommendations. We suggest that it is important that FATF explores an interactive and cooperative approach to grey listing, first to understand why countries are not complying and secondly to work with them to achieve an effective outcome.
An Africa Focused Implementation Agenda
Building on the February 2026 direction and Africa’s monitoring experience, durable reform requires measurable outcomes:
- Stronger inter-agency coordination with shared investigative pipelines
- Enhanced FIU analytical capacity and case conversion
- Verified and accessible beneficial ownership systems
- Consistent risk-based DNFBP supervision
- Integration of cyber-fraud risks into national AML strategies
- Effective supervision requires operational oversight, beneficial ownership within digital structures, and strengthened cross-border cooperation.
Conclusion: From Compliance Cycles to System Resilience
The February 2026 FATF Plenary confirmed that the global AML/CFT standard has evolved and will continue to do so in the future. Fraud disruption, digital asset oversight, sanctions implementation, and measurable asset recovery now define system credibility. For African jurisdictions, the challenge is no longer legislative reform but institutional sustainability. Grey-listing cycles demonstrate that technical compliance without sustained operational integration is insufficient. Africa’s response must therefore move beyond episodic compliance toward structural resilience guided by verified beneficial ownership accessible data, operational VASP supervision, technology-enabled FIUs, enforceable sanctions regimes, and improved confiscation outcomes. Transforming compliance pressure into long-term governance consolidation is key to sustainable reform.
Author: Juliet Ibekaku-Nwagwu (Doctoral Researcher, Sussex Law School, University of Sussex), with contributions from Tijani Dauda and Emmanuela OkonkwoAbutu (both of the African Center for Governance, Asset Recovery and Sustainable Development)
FOOTNOTE:
[1] The African FSRBs include: Action Group Against Money Laundering in Central Africa (GABAC); Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG); Middle East and Northern African (MENA) FATF; Inter-Governmental Action Group Against Money Laundering in West Africa (GIABA).
