
High-Risk Jurisdictions
Country Risk Assessment
Country risk categorisation is a crucial factor in global finance, influencing investment decisions, regulatory compliance, and economic stability. High-risk jurisdictions are countries
that pose significant financial, regulatory, and operational risks to businesses and financial institutions. The Financial Action Task Force (FATF) and global institutions such as the IMF and World Bank classify countries based on their adherence to international financial crime standards, economic stability, and governance efficiency.
Risk Factors
- Financial Crime & Money Laundering Risks – Weak anti-money laundering (AML) controls and terrorist financing concerns.
- Political Instability & Sanctions – Nations experiencing civil unrest, corruption, or subject to international sanctions.
- Economic Volatility – Countries with high inflation, sovereign debt distress, and unstable financial institutions.
- Tax Evasion & Banking Secrecy – Jurisdictions that facilitate illicit financial flows, offshore tax evasion, and non-cooperation in financial transparency.
Current High-Risk Jurisdictions (2024-2025)
1. FATF Grey and Black Listed Countries (As of January 2025)
The FATF maintains two lists:
List | Definition | Countries |
---|---|---|
Black List | Non-cooperative jurisdictions with severe AML/CFT deficiencies | North Korea, Iran, Myanmar |
Grey List | Monitored jurisdictions with strategic deficiencies in AML/CFT regulations | Pakistan, South Africa, UAE, Nigeria, Philippines, Syria, Turkey |
2. Countries with High Economic & Sovereign Risk (IMF Report, 2024)
The IMF classifies high-risk countries based on sovereign debt risk, inflation, and economic distress
Country | Risk Category | Key Economic Risks |
---|---|---|
Argentina | Sovereign Debt Crisis | Inflation exceeding 200%, IMF bailout dependency |
Lebanon | Banking Collapse | Currency devaluation, unsustainable external debt |
Sri Lanka | High Fiscal Risk | Ongoing IMF debt restructuring, economic recession |
Turkey | Monetary Volatility | High inflation, geopolitical tensions |
Egypt | External Debt Crisis | Rising inflation, reduced investor confidence |
3. Sanctioned & Geopolitically Unstable Nations
- Russia & Belarus: Heavy
Western sanctions post-Ukraine war. - Iran & North Korea: Global
Trade and banking restrictions due to nuclear program concerns. - Afghanistan, Syria, Venezuela:
Political instability, weak financial governance, sanctions compliance issues.
OFAC Sanctions List – 2024
4. Basel AML Index
The Basel AML Index is an independent ranking and risk assessment tool for money laundering and related financial crime risks. Produced by the Basel Institute on Governance since 2012, it provides a holistic picture of money laundering risks around the world.
5. Corruption Perceptions Index (CPI)
The ‘Transparency International Corruption Perceptions Index (CPI) is an average of expert scores produced by a variety of agencies assessing corruption at the national level as perceived by experts and businesspeople. It is an aggregate of corruption risk perception and does not measure transparency.
2023 Corruption Perceptions Index: Explore the… – Transparency.org
6. Sovereign Credit Ratings
Sovereign credit ratings are important to international investors because they quantify an assessment of country risk.
Sovereign Credit Ratings Methodology: An Evaluation – WP/02/170
7. Financial Secrecy Index
Financial secrecy facilitates tax abuse, enables money laundering and undermines the human rights of all. The index identifies the world’s biggest suppliers of financial secrecy and spotlights the laws that governments can change to reduce their contribution to financial secrecy.
Important to understand the following:-
- Risk Assessment, Profiling & Categorisation for High Risk Jurisdictions
- Name & Transaction screening
- Best Practices, Case Studies & current geo-political tensions
Useful links -
- FATF’s High-Risk Jurisdictions Report (2024) : https://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/
- FATF Country Listings – January 2025 : https://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/
- Countries with High Economic & Sovereign Risk (IMF Report, 2024)- IMF Risk Report – 2024 : https://www.elibrary.imf.org/downloadpdf/journals/002/2024/316/article-A002-en.pdf
- OFAC Sanctions List – 2024 : https://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx
- Basel AML Index 2024 – https://www.baselgovernance.org/amlindex
- UNODC Money Laundering Report (2024):https://www.unodc.org/unodc/en/money-laundering/
- World Bank Economic Risk Report – 2024 : https://www.elibrary.imf.org/downloadpdf/journals/002/2024/073/article-A001-en.pdf
- FATF KYC Guidelines (2024) : https://www.fatf-gafi.org/publications/fatfrecommendations/documents/rba-banks.html
- World Bank’s Political Risk Insurance Framework : https://www.worldbank.org/en/programs/miga/political-risk-insurance
- IMF Report on Digital Currency & AML : https://www.elibrary.imf.org/downloadpdf/journals/002/2024/101/article-A001-en.pdf