AED ¦ Circulaire N° 768-35

FATF Plenary – February 2026: New Calls for Counter‑Measures and Enhanced Due Diligence

The Financial Action Task Force (FATF) plenary in February 2026 issued a fresh set of statements that again reshuffle the priorities for compliance teams, risk officers and financial intelligence units worldwide. The FATF reaffirmed longstanding concerns about jurisdictions whose anti–money laundering and counter–terrorist finance (AML/CFT) frameworks contain strategic deficiencies, called for targeted counter‑measures where appropriate, and requested heightened vigilance and reporting from institutions interacting with listed jurisdictions. The Luxembourg Direction de l’enregistrement, des domaines et de la TVA circulated these outcomes and reminded domestic operators to apply reinforced due diligence and reporting measures.

North Korea – maintain tight restrictions and reinforce suspicious‑activity reporting

The FATF reiterated its deep concern about the Democratic People’s Republic of Korea’s (DPRK) persistent inability to remedy major AML/CFT weaknesses, and emphasized the heightened risk posed by DPRK‑linked illicit finance connected to proliferation of weapons of mass destruction and their financing. Since 2011 the FATF has urged jurisdictions to apply targeted financial sanctions consistent with United Nations Security Council resolutions and to adopt stringent counter‑measures to protect their financial systems. These counter‑measures include terminating correspondent banking relationships with DPRK banks, closing DPRK bank branches and subsidiaries, and limiting business and transactional relationships with DPRK nationals and entities.

The plenary noted that despite past calls, the DPRK has increased its connectivity with the international financial system, amplifying proliferation financing risks. Financial institutions are therefore required to treat relationships and transactions involving DPRK persons, entities or intermediaries with particular care. Enhanced customer due diligence, strengthened transaction monitoring and persistent follow‑up are expected. Where transactions involving the DPRK raise suspicions, the Luxembourg circular explicitly requests notification to the national financial crime service and reinforced suspicious activity reporting to the Financial Intelligence Unit.

Iran – still on the call for counter‑measures until full action plan implementation

The FATF reiterated that Iran remains a jurisdiction of concern because its 2016 action plan addressing strategic AML/CFT deficiencies was not completed. Although Iran took several legislative and procedural steps in earlier years and provided an update in September 2025 regarding ratification of the Palermo Convention, the FATF judged Iran’s reservations to that convention too broad and its domestic implementation inconsistent with FATF standards. The plenary therefore affirmed that Iran will remain subject to FATF scrutiny until it completes all action‑plan steps.

For institutions that deal with Iranian counterparts, the FATF calls again for strengthened group‑level controls over branches and subsidiaries in Iran, enhanced surveillance and control mechanisms, and more robust suspicious‑transaction reporting. The FATF expects proportionate enhanced due diligence that increases the frequency and depth of checks, targets types of transactions for closer scrutiny, and requires gathering clear information on the purpose and economic rationale for proposed transactions.

Myanmar – continued monitoring with potential escalation if no progress by mid‑2026

Myanmar remains on the FATF’s monitored list after the country’s action plan lapsed and earlier commitments did not deliver all required improvements. The FATF confirmed in October 2022 that additional measures were necessary, and it has called on members and other jurisdictions to apply proportionate enhanced vigilance for risks emerging from Myanmar. If the FATF sees no further progress by June 2026, it will consider elevating counter‑measures. Firms should therefore apply heightened due diligence to Myanmar‑linked business relationships, impose more frequent controls and focus on transactions that warrant deeper scrutiny, while ensuring timely suspicious activity reporting.

Bastian Schwind-Wagner _Follow

"The FATF’s February 2026 pronouncements reinforce the need for immediate and proportionate enhanced due diligence when dealing with jurisdictions identified as high risk or subject to ongoing monitoring. Financial institutions must prioritize strengthened transaction monitoring, clearer economic purpose documentation, and timely suspicious activity reporting to national authorities.

Failure to act on these expectations risks regulatory escalation, loss of correspondent relationships and significant reputational damage. Institutions should review group‑level controls, increase oversight of branches and subsidiaries in affected jurisdictions, and ensure compliance teams are prepared to justify risk‑based decisions."

Other jurisdictions with strategic deficiencies – ongoing attention to risk exposure

The FATF also listed jurisdictions that have strategic AML/CFT deficiencies but have engaged with FATF through action plans. These include Algeria, Angola, Bolivia, Bulgaria, Cameroon, Côte d’Ivoire, the Democratic Republic of the Congo, Haiti, British Virgin Islands, Kenya, Kuwait, Lao PDR, Lebanon, Monaco, Namibia, Nepal, Papua New Guinea, South Sudan, Syria, Venezuela, Vietnam and Yemen. The FATF’s public statements make clear that institutions should account for the specific deficiencies noted by the FATF when assessing risk and applying mitigations for business and transactional relationships involving these jurisdictions.

Practical implications for compliance programs – vigilance, escalation and group‑level controls

The FATF pronouncements reassert several operational expectations.

1. Institutions must implement enhanced customer due diligence and transaction monitoring for relationships involving the named jurisdictions. That includes increased frequency and depth of reviews, targeted selection of high‑risk transaction types for deeper analysis, and documented rationale where business is maintained.
2. Multinational groups are expected to subject branches and subsidiaries in high‑risk jurisdictions to reinforced group‑level controls and external audits, where appropriate.
3. National authorities and reporting entities must preserve and, if necessary, strengthen mechanisms for timely suspicious activity reporting to their Financial Intelligence Units.

Regulatory and supervisory risk – readiness for counter‑measures and reputational stakes

Jurisdictions and firms that fail to heed FATF calls may face progressive policy responses that could include formal counter‑measures. Such steps carry regulatory, operational and reputational consequences for correspondent banking, cross‑border trade finance and global transaction flows. Banks, payment services, and other reporting entities should therefore map their exposure to the named countries, review onboarding and ongoing monitoring rules, and ensure that compliance governance is capable of rapid escalation and evidence preservation in case of supervisory review.

Conclusion – clear directive to act now and keep reporting channels open

The February 2026 FATF plenary reiterated known concerns and tightened the spotlight on DPRK and Iran while keeping Myanmar under close watch.

The message to regulated entities is unambiguous:

• apply proportionate enhanced due diligence;
• strengthen group‑wide controls for exposures in high‑risk jurisdictions; and
• maintain reinforced suspicious‑activity reporting to national FIUs.

For practitioners in Luxembourg and beyond, the AED circular underscores that vigilance and documentation are vital to both manage financial crime risk and to demonstrate compliance with international expectations.

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