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FATF October 2025 Plenary: Targeted Calls and Heightened Vigilance for High‑Risk Jurisdictions

The Financial Action Task Force (FATF) plenary in October 2025 produced a set of declarations with direct operational implications for financial institutions, compliance teams and national authorities. The FATF reiterated calls for counter‑measures against jurisdictions with persistent strategic deficiencies in anti‑money laundering and counter‑terrorist financing (AML/CFT) regimes and urged proportionate enhanced vigilance for other high‑risk jurisdictions. This article summarizes the FATF’s October 2025 positions, explains practical implications for compliance and reporting processes, and highlights immediate actions firms should take to align with the FATF guidance.

FATF’s highest concern – jurisdictions subject to counter‑measures

The FATF singled out two jurisdictions where it called on members and other jurisdictions to apply counter‑measures because of substantial and strategic AML/CFT failures: the Democratic People’s Republic of Korea (DPRK) and the Islamic Republic of Iran. For both, the FATF emphasized continued serious risks to the international financial system and specified expectations that go beyond routine due diligence.

DPRK – enforce strict limits and report suspicions

The FATF reiterated long‑standing concerns about the DPRK’s involvement in illicit activity that funds proliferation and other criminality.

The FATF’s calls to action are specific and forceful:

• terminate correspondent banking relationships with DPRK banks;
• close branches and subsidiaries of DPRK banks operating within your jurisdiction; and
• substantially limit business relationships and financial operations with DPRK nationals and entities.

The plenary also stressed that enhanced vigilance and enforcement of these measures are required because DPRK connectivity to international finance has increased, elevating proliferation financing risks. Institutions and professionals are urged to treat DPRK‑related dealings as requiring strengthened monitoring, to avoid facilitation or inadvertent abuse of legitimate channels, and to file suspicious activity reports with their Financial Intelligence Unit whenever DPRK‑linked risk is suspected.

Iran – continued placement under call for counter‑measures until plan fully implemented

The FATF reiterated that, despite past political commitments and partial reforms, Iran has not fully completed the FATF action plan required to address strategic AML/CFT deficiencies. The FATF noted Iran’s recent steps such as ratifying the UN Convention against Transnational Organized Crime (Palermo), but found reservations and domestic implementation inadequate relative to FATF standards. Iran remains on the list that requires members to apply effective counter‑measures consistent with Recommendation 19. The FATF asked jurisdictions and firms to apply enhanced, targeted controls for business and transaction relationships with Iranian persons and entities and to strengthen reporting mechanisms to their Financial Intelligence Units.

Bastian Schwind-Wagner _Follow

"The FATF’s October 2025 declarations reinforce that jurisdictions with unresolved AML/CFT deficiencies create tangible risks for the global financial system, requiring decisive and proportionate counter‑measures. Financial institutions must adapt controls, reporting and due diligence to address elevated risks from DPRK, Iran and other flagged jurisdictions.

Compliance teams should immediately update country risk assessments, transaction monitoring rules and correspondent due diligence procedures, and ensure timely suspicious activity reporting to their Financial Intelligence Unit. Clear documentation and senior‑level oversight are essential to demonstrate adherence to FATF expectations and to protect institutions from facilitation of illicit finance."

Jurisdictions requiring proportionate enhanced vigilance

The FATF identified Myanmar as a jurisdiction that requires continued enhanced vigilance proportionate to the risks it poses. Myanmar’s plan of action has not been completed and the FATF warned that, absent further progress by February 2026, additional counter‑measures may be considered. Financial institutions must therefore maintain and, where appropriate, increase the intensity of monitoring and risk management for customers, transactions and correspondent relationships associated with Myanmar. The FATF’s expectations include increased frequency and scope of controls, targeted transaction reviews, and collecting additional information on the purpose of transactions.

Other jurisdictions with strategic deficiencies – consider risks in relationships and transactions

A larger group of jurisdictions was listed as having strategic AML/CFT deficiencies but which have engaged with the FATF through action plans. These jurisdictions include Algeria, Angola, Bolivia, Bulgaria, Cameroon, Côte d’Ivoire, the Democratic Republic of the Congo, Haiti, the British Virgin Islands, Kenya, the Lao People’s Democratic Republic, Lebanon, Monaco, Namibia, Nepal, South Sudan, Syria, Venezuela, Vietnam and Yemen. The FATF recommends that firms and authorities consider the specific deficiencies identified for each jurisdiction and factor those risks into business acceptance, ongoing monitoring and transaction screening processes.

Operational impact – what compliance functions must do now

Governance and risk assessment frameworks should be updated immediately to reflect the FATF declarations from October 2025.

Institutions should:

1. reassess country risk ratings and revise risk appetite statements where necessary;
2. apply mandatory counter‑measures and restrictions for DPRK and Iran as specified by the FATF and by relevant national authorities;
3. increase the intensity and frequency of reviews for Myanmar and the other listed jurisdictions, and recalibrate transaction monitoring rules to capture typologies linked to proliferation financing, sanctions evasion, and other high‑risk conduct;
4. enhance due diligence on correspondents, branches, subsidiaries and third‑party intermediaries with exposure to the named jurisdictions; and
5. ensure staff training communicates the new expectations and the practical indicators of DPRK‑, Iran‑ and Myanmar‑linked risk.

Suspicious reporting and cooperation with authorities

The FATF explicitly asked reporting entities to maintain strengthened suspicious activity reporting mechanisms and to notify their Financial Intelligence Unit – in Luxembourg, the Cellule de Renseignement Financier – whenever transactions raise suspicion linked to the DPRK, Iran, Myanmar or other jurisdictions with identified strategic deficiencies. Compliance functions should review internal escalation pathways, ensure timely filings, and cooperate proactively with supervisory agencies about exposure and mitigation measures.

Sanctions screening and correspondent banking

Given the FATF’s strong position on terminating or restricting correspondent relationships with DPRK banks, institutions must validate that sanctions screening systems, name lists and relationship registers capture DPRK financial institutions, sanctioned persons and entities, and associated red flags for sanctions evasion. For Iran, firms should apply group‑wide enhanced controls and consider external audits where required, particularly for branches and subsidiaries with exposure. Correspondent banking due diligence must be rigorous, documented and demonstrably risk‑based.

Documentation, audit trail and board reporting

All enhanced measures and decisions to accept or terminate business with entities from the listed jurisdictions should be documented and supported by a clear risk rationale. Audit trails must reflect the revised country risk analyses, suspicious activity filings and any corrective action taken. Senior management and boards should receive concise, regular reporting on exposures, remediation plans, and compliance testing results tied to the FATF declarations.

Conclusion – steady vigilance and compliance alignment

The FATF’s October 2025 plenary reaffirms that jurisdictions with persistent strategic AML/CFT deficiencies pose real risks to the international financial system, particularly where proliferation financing and terror‑financing threats are involved. For compliance teams, the message is unambiguous: apply the FATF’s counter‑measures for DPRK and Iran, intensify monitoring for Myanmar, and incorporate the identified country deficiencies into risk‑based controls for the broader list of jurisdictions. Immediate updates to policies, transaction monitoring, correspondent due diligence and suspicious reporting are necessary to remain aligned with global expectations and to protect the integrity of financial systems.

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