FATF June 2025 Update and Its Impact on GIFT IFSC Entities

GIFT CFO
5 days ago
3 min read

🔍 What Is FATF and Why It Matters?

The Financial Action Task Force (FATF) is the global standard-setter for combating money laundering, terrorism financing, and proliferation financing. Its “grey” and “black” lists are closely monitored by regulators, financial institutions, and investors worldwide.

As GIFT IFSC evolves into India’s gateway for global financial services, FATF’s country listings hold significant operational and reputational relevance.

Whether you are running a banking unit, an insurance business, an asset management company, a fintech platform, or a treasury centre in GIFT IFSC, understanding FATF updates is crucial for:

Client onboarding and enhanced due diligence (EDD)
Risk-based AML frameworks
Selection of counterparties and partners
Building global credibility and investor confidence

🗓️ FATF Update – 13 June 2025 Highlights

FATF concluded its June plenary with key updates to the country risk lists:

✅ Countries REMOVED from the FATF Grey List:

Croatia
Mali
Tanzania

Implication: These jurisdictions have improved their AML-CFT regimes. This move may reduce compliance overheads for transactions involving entities from these countries, easing cross-border engagement.

⚠️ Countries REMAINING on the Grey List:

These countries are under increased monitoring due to strategic AML/CFT deficiencies.

Algeria, Angola, Bolivia, Bulgaria, Burkina Faso, Cameroon, Côte d'Ivoire, DRC, Haiti, Kenya, Lao PDR, Lebanon, Monaco, Mozambique, Namibia, Nepal, Nigeria, South Africa, South Sudan, Syria, Venezuela, Vietnam, Virgin Islands (UK), Yemen

Implication for GIFT IFSC entities:

Enhanced due diligence (EDD) may be required while onboarding clients or counterparties from these regions.
Fintechs and financial institutions need to update AML risk matrices accordingly.
Treasury centres should be cautious while routing funds or structuring transactions involving these countries.

🚫 Countries on the FATF Black List (High-Risk Jurisdictions):

North Korea
Iran
Myanmar

These countries are deemed to have severe strategic deficiencies in AML/CFT frameworks and pose high financial crime risk.

Implication:

GIFT IFSC units should avoid exposure to these jurisdictions.
Any transactions (even indirect) involving these regions may attract strict regulatory scrutiny.

⛔ No Change: Russia’s FATF Membership Remains Suspended

Russia remains suspended from FATF participation due to ongoing geopolitical and compliance concerns.
No new restrictions have been added in this plenary session.

🔎 Why This Update Matters for GIFT IFSC

As GIFT City aims to be a trusted jurisdiction for global capital, FATF alignment is not optional — it is a strategic pillar. Here’s how it affects the ecosystem:

1. Compliance Culture & Global Trust

GIFT IFSC entities are expected to apply globally benchmarked AML-CFT practices. Awareness of FATF updates enhances your compliance posture and helps build trust with global banks, investors, and counterparties.

2. Client Risk Profiling & Onboarding

Fintechs, NBFCs, custodians, and fund managers must ensure clients and beneficial owners are not from or linked to high-risk jurisdictions. FATF lists should be incorporated into automated KYC screening tools and onboarding flows.

3. Cross-Border Fund Flows

For treasury units and financial service providers, FATF lists influence:

Cross-border payment structuring
Routing through international correspondent banks
Access to US dollar clearing and international liquidity

4. Investment Risk & Fund Design

Asset managers and AIFs in GIFT IFSC should factor FATF risks while designing fund structures, sourcing LPs, and investing in foreign securities.

📌 Final Thought: GIFT IFSC Needs to Stay Ahead

The strategic ambition of GIFT City hinges not just on tax efficiency or regulatory light-touch — but also on robust governance, transparency, and FATF-aligned compliance.

As we scale the global financial ladder, keeping pace with such global standards will define who we can do business with and how fast we grow.

📢 For GIFTCFO subscribers: We’ll keep you updated on future FATF meetings and key risk developments affecting the IFSC ecosystem.

👉 Need help aligning your onboarding, AML framework, or global treasury policies? Reach out to us.