Addressing global disparities in Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) compliance and effectiveness is increasingly critical due to escalating financial crime risks. This study aims to identify natural clusters of countries based on their performance in FATF technical compliance and effectiveness assessments, thereby facilitating tailored AML/CFT support strategies. The study utilised hierarchical clustering, Principal Component Analysis (PCA), and ANOVA tests, employing FATF assessment ratings data for Immediate Outcomes (IO1-IO11) and Recommendations (R.1-R.40). Four distinct clusters were identified, highlighting significant variations in AML/CFT compliance and effectiveness. Advanced economies demonstrated high compliance and effectiveness, emphasising the strategic use of technology, cybersecurity, and effective regulatory oversight. Developing and transitional countries exhibited mixed or low performance, reflecting institutional, socio-economic, and governance-related challenges, including weaker institutional frameworks, higher corruption rates, and socio-economic pressures driving financial crime. The research also underscores persistent global challenges in adapting to new technologies and adequately supervising non-financial sectors. These clusters underline the necessity of differentiated, context-specific AML/CFT strategies, emphasising targeted interventions, technology integration, ethical frameworks, and regional cooperation to enhance global financial integrity. Additionally, these findings differ from the FATF’s traditional grouping approach, which typically classifies countries primarily based on risk assessments and geopolitical factors rather than performance-based data analysis.

Climate-related financial risks have become a central concern for financial institutions and regulators, particularly within the European financial system. This paper examines how climate-related risks are integrated into governance, risk assessment, and regulatory practices in European financial institutions. Using a structured narrative literature review of academic and institutional sources published between 2015 and 2026, the study synthesizes evidence on physical, transition, and liability risks, as well as the frameworks and tools used to assess them, including climate stress testing, scenario analysis, and climate value-at-risk models. The findings indicate that climate considerations are increasingly embedded within governance structures and supervisory frameworks; however, implementation remains fragmented due to inconsistent data, methodological limitations, and institutional barriers. The review further highlights that existing risk models often struggle to capture the long-term and non-linear nature of climate-related uncertainty. This paper contributes to the literature by linking financial stability theory and institutional theory to explain the persistent gap between regulatory ambition and institutional practice within the European context. The study concludes by discussing implications for supervisory policy, disclosure standardization, and climate-risk integration in financial decision-making.