The country where your supplier is based is one of the most significant factors in assessing transaction risk. Country risk encompasses the legal and regulatory environment, the quality of anti-money laundering (AML) controls, the prevalence of fraud and corruption, and the practical ability to pursue legal remedies if something goes wrong. This guide explains the main country risk frameworks used by banks and compliance professionals, and how to apply them in your own supplier due diligence.
The FATF Framework: The Global Standard for Country Risk
The Financial Action Task Force (FATF) is the international standard-setter for anti-money laundering and counter-terrorist financing. It publishes two lists of countries with strategic deficiencies in their AML/CFT frameworks, updated at each plenary meeting (February, June, and October each year).
The Grey List (formally "Jurisdictions under Increased Monitoring") identifies countries that have committed to addressing deficiencies but have not yet done so. Banks and financial institutions are required to apply enhanced due diligence to transactions involving grey-listed countries.
The Black List (formally "High-Risk Jurisdictions subject to a Call for Action") identifies countries with severe deficiencies. Banks are required to apply the highest level of scrutiny to any transactions involving these jurisdictions, and in practice many banks simply refuse to process payments to or from black-listed countries.
Always verify at fatf-gafi.org as lists are updated at the February, June, and October plenaries. The lists below reflect the 19 June 2026 plenary outcomes.
FATF Black List (Call for Action) — June 2026
Transactions involving these jurisdictions face the highest level of scrutiny from banks and may be refused entirely. Legitimate trade with these countries is extremely difficult.
| Country | Status | Key Concern |
|---|---|---|
| North Korea (DPRK) | Black List | Weapons proliferation financing, sanctions evasion |
| Iran | Black List | Terrorism financing, sanctions evasion, AML deficiencies |
| Myanmar | Black List | Military junta, drug trafficking, AML collapse post-coup |
FATF Grey List — June 2026
These countries are under increased monitoring. Banks apply enhanced due diligence to transactions involving them. This does not mean you cannot trade with suppliers in these countries — it means you should apply more rigorous verification.
| Country | Region | Primary Concern |
|---|---|---|
| Angola | Sub-Saharan Africa | Corruption, beneficial ownership transparency |
| Bolivia | Latin America | AML framework deficiencies, drug trafficking |
| Bosnia & Herzegovina | Southeast Europe | AML supervision, organised crime |
| Bulgaria | Eastern Europe | Organised crime, corruption |
| Cameroon | Central Africa | AML framework, corruption |
| Côte d'Ivoire | West Africa | AML framework deficiencies |
| DR Congo | Central Africa | Conflict minerals, AML collapse |
| Haiti | Caribbean | Political instability, gang control, AML collapse |
| Iraq | Middle East | AML framework, corruption, sanctions risk |
| Kenya | East Africa | AML framework, corruption |
| Kuwait | Middle East | AML supervision, beneficial ownership |
| Laos | Southeast Asia | Drug trafficking, AML deficiencies |
| Lebanon | Middle East | Banking sector collapse, terrorism financing risk |
| Monaco | Europe | Beneficial ownership, tax transparency |
| Nepal | South Asia | AML framework deficiencies |
| Papua New Guinea | Pacific | AML framework, corruption |
| South Sudan | East Africa | Conflict, AML collapse |
| Syria | Middle East | Conflict, sanctions, AML collapse |
| Venezuela | Latin America | Corruption, sanctions, AML deficiencies |
| Vietnam | Southeast Asia | AML framework, beneficial ownership |
| British Virgin Islands | Caribbean | Offshore secrecy, beneficial ownership opacity |
| Yemen | Middle East | Conflict, AML collapse, terrorism financing |
High-Risk Countries Not on the FATF List
FATF membership and grey-listing is a political process — some high-risk countries are not listed because they are FATF members in good standing or have diplomatic protection. The following countries carry elevated trade risk despite not appearing on the FATF grey list:
- Russia and Belarus — subject to comprehensive Western sanctions since 2022. Most banks will not process payments to or from these countries.
- China — beneficial ownership transparency is limited, and enforcement of foreign judgements is difficult. Not high-risk per se, but requires enhanced verification for first-time transactions.
- UAE — removed from the FATF grey list in 2024 but remains a jurisdiction of concern for sanctions evasion and beneficial ownership opacity.
- Turkey — elevated corruption risk and currency instability. Not grey-listed but warrants careful due diligence.
How Country Risk Affects Your Due Diligence
Country risk does not mean you cannot trade with suppliers in higher-risk jurisdictions — it means you need to apply proportionally more rigorous verification. Here is a practical framework:
| Country Risk Level | Minimum Due Diligence Steps |
|---|---|
| Low Risk (UK, EU, US, AU, SG) | Registry check, sanctions screen, verify bank account name |
| Moderate Risk (CN, IN, TR, BR, AE) | Above + professional credit report, verify directors, consider test order |
| High Risk (FATF Grey List) | Above + source of funds verification, Letter of Credit for payment, trade credit insurance |
| Very High Risk (FATF Black + Sanctioned) | Seek legal advice before proceeding. Most transactions will be refused by banks. |
🔒 Protect High-Risk Country Transactions
Trade credit insurance is particularly important when sourcing from FATF grey-list countries. Get a quote tailored to your specific trade corridor.
Use our free Supplier Due Diligence Risk Checker to assess your specific supplier — it incorporates country risk as one of eight weighted factors and provides direct links to official registries and sanctions lists. Also see our supplier fraud case studies for real-world examples of how country risk manifests in practice.