Algeria and Namibia have been removed from the Financial Action Task Force's (FATF) grey list after strengthening anti-money laundering and counter-terrorist financing controls, a move expected to improve investor confidence and facilitate access to international finance.

In a statement, the Paris-based watchdog said both countries had made significant progress in implementing action plans designed to address strategic deficiencies in their anti-money laundering and counter-terrorist financing (AML/CFT) frameworks.

The FATF decision could lower compliance costs for banks, ease cross-border transactions and enhance the attractiveness of both countries to foreign investors and international lenders. It comes as Algeria is seeking capital for mining and renewable energy projects, while Namibia is pursuing large-scale investments in uranium, green hydrogen and critical minerals.

Sovereign credit profiles in both countries have also stabilised in recent years. Fitch Ratings assigns both Algeria and Namibia long-term foreign-currency ratings of BB-, while S&P Global Ratings rates Algeria at BB+ and Namibia at BB-. Moody's rates Algeria at Ba1, with Namibia also remaining below investment grade.

Although both sovereigns remain non-investment grade, ratings agencies have cited improving fiscal metrics, manageable external debt and stronger external balances as supporting factors. Stronger AML/CFT compliance is increasingly viewed as supportive of governance and transparency, factors that can influence investor perceptions and access to international finance.

Algeria strengthens financial oversight

Algeria, which had been under enhanced monitoring since October 2024, improved the effectiveness of its AML/CFT framework through reforms aimed at strengthening suspicious transaction reporting, implementing targeted financial sanctions against terrorist financing and increasing oversight of higher-risk sectors.

The FATF said Algeria had addressed the commitments contained in its action plan and would continue working with the Middle East and North Africa Financial Action Task Force (MENAFATF) to maintain progress.

The removal comes as Algeria seeks to diversify its hydrocarbon-dependent economy and attract greater foreign investment into manufacturing, mining and renewable energy. Energy exports account for more than 90% of the country's foreign currency earnings, but the government has been pursuing reforms aimed at encouraging private investment and expanding non-oil sectors.

Namibia exits grey list after governance reforms

Namibia, which had been grey-listed in February 2024, strengthened preventive measures through inspections and awareness campaigns aimed at ensuring financial institutions and designated non-financial businesses complied with AML/CFT regulations.

The country also enhanced beneficial ownership transparency, increased reporting requirements for legal entities and strengthened the analytical capabilities of its Financial Intelligence Centre through additional staffing and training.

Namibia will continue to work with the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to consolidate the reforms.

The country's removal from the list comes as Namibia seeks to position itself as a destination for investment in green hydrogen, renewable energy and mining. Analysts say improved compliance standards could support efforts to attract long-term capital for projects linked to uranium, rare earths and critical minerals.

Six African countries remain under enhanced monitoring

While Algeria and Namibia exited the grey list, the FATF confirmed that Angola, Cameroon, Côte d'Ivoire, the Democratic Republic of the Congo (DRC), Kenya and South Sudan remain under enhanced monitoring.

The organisation said all six countries had taken steps to strengthen their AML/CFT frameworks but required further reforms. In Cameroon's case, FATF noted that progress had been made, but all deadlines under its action plan had expired, necessitating additional efforts.

For Côte d'Ivoire, the watchdog said most elements of the country's action plan had been completed and an on-site assessment was now required to verify that reforms had been effectively implemented and supported by continued political commitment.

Grey listing carries economic costs

Correspondent banking relationships are often among the first areas affected by grey-listing. Increased due-diligence requirements can raise transaction costs for local banks and businesses and slow international payments, particularly in trade finance.

FATF compliance has become increasingly relevant for sovereign credit assessments, as transparency and financial governance are important considerations for ratings agencies and international lenders.

Grey listing does not trigger sanctions but often increases scrutiny from international banks and investors, potentially raising borrowing costs and complicating access to global financial markets.

Countries placed under enhanced monitoring typically face increased compliance requirements and delays in cross-border transactions. Studies by the International Monetary Fund and the World Bank have shown that grey-listing can reduce capital inflows and foreign direct investment while increasing transaction costs.

Africa has become an increasing focus of FATF monitoring as governments strengthen financial oversight frameworks to meet international standards. While grey-listing does not imply sanctions, the contrasting experiences of Algeria and Namibia and several Sub-Saharan African peers underscore the growing importance of governance and financial transparency in determining access to international finance and investment.