FATF February 2026 Update: New Countries Added to Watchlist, Blacklist Unchanged - Complete AML/CFT Guide

The Financial Action Task Force (FATF) concluded its fifth plenary meeting under Mexican presidency on February 13, 2026, announcing significant updates to its high-risk jurisdictions list and introducing new measures to combat cyber-enabled fraud and virtual asset risks. These developments have major implications for financial institutions worldwide regarding anti-money laundering (AML) and counter-terrorism financing (CFT) compliance.

High-Risk Jurisdictions: The FATF Blacklist Remains Unchanged

The FATF blacklist, officially known as "High-Risk Jurisdictions subject to a Call for Action," continues to include three countries: North Korea (DPRK), Iran, and Myanmar. These jurisdictions face the most severe countermeasures due to significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.

North Korea remains a critical concern, with FATF expressing alarm over the DPRK's increased connectivity with the international financial system despite ongoing sanctions. Financial institutions must terminate correspondent relationships with DPRK banks, close any subsidiaries or branches, and limit all business relationships with DPRK persons.

Iran's status remains contentious following its January 2026 update on ratifying the Palermo Convention and Terrorist Financing Convention. However, FATF determined that Iran's reservations are overly broad and its domestic compliance falls short of FATF standards. The organization continues to call for effective countermeasures, including prohibiting financial institutions from establishing new correspondent relationships with Iranian entities.

Myanmar faces enhanced due diligence requirements with a critical deadline approaching in June 2026. If progress isn't demonstrated, FATF will consider implementing full countermeasures against the country.

Jurisdictions Under Increased Monitoring: Grey List Expansion

In a significant development, FATF added Kuwait and Papua New Guinea to its list of jurisdictions under increased monitoring, commonly referred to as the "grey list." These countries have committed to working with FATF to address strategic deficiencies within agreed timeframes through action plans.

New Strategic Initiatives: Cyber Fraud and Virtual Assets

The February 2026 plenary approved groundbreaking reports addressing emerging threats in the digital finance landscape. The cyber-enabled fraud paper highlights the escalating global threat and emphasizes the need for innovative techniques to prevent fraud, recover victims' funds, and prosecute perpetrators.

Two critical virtual asset reports will be published next month:

Understanding and Mitigating the Risk of Offshore Virtual Asset Service Providers (oVASPs) - This report examines how criminals exploit gaps in regulatory coverage and provides guidance for governments to address these vulnerabilities.

Targeted Report on Stablecoins and Unhosted Wallets - Given stablecoins' rapid growth in scale and importance, this report offers recommendations for countries and the private sector to mitigate emerging risks, particularly regarding peer-to-peer transactions.

Mutual Evaluations and Leadership Changes

FATF adopted assessment reports for Austria, Italy, and Singapore under the new round of mutual evaluations, which place greater emphasis on countries' effectiveness in tackling money laundering and terrorist financing rather than just technical compliance.

The plenary also appointed Giles Thomson of the United Kingdom as the incoming FATF President for the 2026-2028 term, succeeding Mexico's Elisa de Anda Madrazo.

Compliance Implications for Financial Institutions

These updates require immediate attention from compliance officers and AML/CFT professionals. Financial institutions must:

• Review and update risk assessments for Kuwait and Papua New Guinea
• Strengthen enhanced due diligence procedures for blacklisted jurisdictions
• Prepare for new guidance on virtual asset service providers
• Implement controls for stablecoin-related transactions
• Monitor developments in cyber-enabled fraud prevention

The FATF's continued suspension of the Russian Federation also remains in effect, requiring ongoing vigilance in transactions potentially linked to Russian financial institutions.

As the global financial landscape evolves with technological innovation, FATF's commitment to addressing emerging risks demonstrates the critical importance of adaptive compliance frameworks. Financial institutions must stay informed and proactive to protect the international financial system from money laundering, terrorist financing, and proliferation financing threats.

Sources: Outcomes FATF Plenary, 11-13 February 2026

High-Risk Jurisdictions subject to a Call for Action - 13 February 2026