• FATF has added Iraq and Bosnia and Herzegovina to its grey list
• The watchdog cited concerns over money laundering, terrorist financing, and financial crime controls
• Bosnia and Herzegovina must strengthen banking supervision and financial system safeguards
• Iraq faces pressure to improve investigations, financial intelligence, and oversight of cash-related risks
• Grey-listing increases international monitoring and regulatory scrutiny
• The designation can lead to enhanced due diligence by banks and investors
• Iraq's inclusion comes as the government seeks economic reform and foreign investment
• Both countries will be required to implement action plans and demonstrate progress
• Acting Director Russ Vought has overseen a major shift in CFPB policy and enforcement priorities
• Lawmakers have requested answers about the deletions by July 2
• Questions continue over the bureau's future direction and leadership

The global fight against money laundering and financial crime has intensified after the Financial Action Task Force (FATF) added Iraq and Bosnia and Herzegovina to its grey list of jurisdictions subject to increased monitoring.

The decision, announced following the watchdog's latest plenary meeting, places both countries under greater international scrutiny as they work to strengthen defenses against money laundering, terrorist financing, and broader financial crime risks.

FATF President Elisa de Anda Madrazo said Bosnia and Herzegovina faces ongoing challenges in preventing criminals and terrorist groups from exploiting its financial system.

"The Plenary added Bosnia and Herzegovina to the grey list, as work is needed to strengthen its defences against criminals and terrorists abusing its financial system and ensure effective supervision of the banking sector," de Anda Madrazo said in a statement.

The grey list is one of the FATF's most significant monitoring tools. Jurisdictions placed on the list have committed to addressing identified deficiencies in their anti-money laundering and counter-terrorist financing frameworks but remain subject to enhanced oversight until improvements are demonstrated.

While grey listing does not trigger formal sanctions, it can have significant economic and financial implications.

International banks, investors, and correspondent institutions often apply increased due diligence measures to transactions involving countries on the list, potentially increasing costs and complicating access to global financial markets.

Iraq was also added to the monitoring list, reflecting concerns about the country's ability to combat financial crime and improve the effectiveness of its financial intelligence framework.

"Iraq has also been added to the grey list as work is needed to tackle risks related to cash, increase money laundering and terrorist financing investigations and enhance the use of financial information," de Anda Madrazo said.

The move comes at a pivotal time for Iraq. Since taking office in May, Prime Minister Ali al-Zaidi has emphasized economic reconstruction, anti-corruption efforts, and foreign investment as central pillars of his administration's agenda.

Strengthening financial governance is widely viewed as a critical component of those ambitions.

International investors and multinational institutions increasingly consider anti-money laundering controls, regulatory oversight, and financial transparency when assessing investment opportunities in emerging markets.

The FATF decision is likely to increase pressure on Iraqi authorities to accelerate reforms and demonstrate measurable progress in financial crime prevention.

Enhanced monitoring may also encourage further improvements in financial intelligence capabilities, law enforcement coordination, and supervisory oversight across the banking sector.

For Bosnia and Herzegovina, the grey-listing decision highlights the importance of strengthening banking supervision and ensuring that financial institutions maintain effective controls against illicit financial activity.

Regulators globally have placed growing emphasis on the role banks play as a first line of defense against money laundering, sanctions evasion, and terrorist financing.

The FATF announcement also reflects a broader international trend toward more rigorous scrutiny of financial crime controls.

Regulators and policymakers worldwide have increasingly focused on the risks posed by illicit finance, particularly as geopolitical instability, sanctions activity, and cross-border criminal networks create new challenges for financial institutions.

Countries placed on the grey list are typically required to implement detailed action plans and report regularly on their progress. Successful completion of those measures can ultimately result in removal from the list, restoring confidence among international investors and financial market participants.

For Iraq, the timing is particularly notable. Al-Zaidi is expected to visit Washington in July as part of efforts to deepen strategic ties with the United States and strengthen international economic relationships.

Demonstrating progress on financial crime controls could become an important element of those discussions.

The addition of Iraq and Bosnia and Herzegovina to the FATF grey list serves as a reminder that robust anti-money laundering frameworks remain a cornerstone of financial stability, investor confidence, and access to global financial markets.