The Basel AML Index methodology is reviewed each year to ensure that it continues to
accurately capture ML/TF risks. This may affect the comparability of the results
over the years.
Comparability between countries is also hampered by a lack of full coverage of
countries by FATF fourth-round evaluations. Data from FATF Mutual Evaluation Reports
(MERs) and Follow-up Reports, which assess the quality of countries' AML/CFT
systems, makes up 35% of the total risk score in the Basel AML Index. The FATF
methodology was revised in 2013 (fourth round of evaluations) in order to assess not
only technical compliance with the FATF Recommendations but the effectiveness of
AML/CFT systems according to 11 Immediate Outcomes
As of 27 September 2023, 161 jurisdictions had been evaluated with the FATF's fourth-round methodology. Although coverage with fourth-round evaluations is increasing, several countries still have MERs based on older methodologies. To mitigate this issue, the Public Edition of the Basel AML Index only includes jurisdictions that have gone through a fourth-round evaluation, as well as meeting other minimum data requirements.
Following the 2023 expert annual review meeting, the Basel AML Index made a small
methodological change to better reflect the progress of jurisdictions that have
graduated from FATF's so-called grey list of jurisdictions subject to increased monitoring.
The change is implemented from 3 October 2023 for the Expert Edition and from 8
November 2023 for the Public Edition.
Jurisdictions that graduate from the FATF's grey list have necessarily made efforts
to improve their AML/CFT systems in line with an action plan agreed with the FATF.
However, the FATF does not reassess the effectiveness of their AML/CFT systems. This
makes it likely that the jurisdiction's risk score on paper does not fairly reflect
their progress in reality.
To remedy this, the Basel AML Index methodology assumes that jurisdictions that have
graduated from the grey list have improved the effectiveness of their AML/CFT
systems to at least a moderate level.
For example, before being placed on the grey list, a Caribbean country was assessed
as having the lowest score (0) in six of the FATF's 11 effectiveness criteria. After
being removed from the grey list, the methodology assumes it has now achieved a
moderate level (1) of effectiveness in those six criteria.