The aim of the Basel AML Index is to provide a holistic picture of ML/TF risk. Risk, as measured by the Basel AML Index, is defined as a jurisdiction’s vulnerability to ML / TF and its capacities to counter it. It is not intended as a measure of the actual amount of ML / TF activity in a given jurisdiction.
The 18 indicators differ in focus and scope. We choose indicators based on several criteria, including their relevance, methodology, jurisdiction coverage, public availability, and the availability of recent data. The indicators and weighting are reviewed annually by an independent expert group.
Click the indicators below to learn what they measure and why they are important for evaluating ML/TF risks.
Most indicators chosen for the Basel AML Index have their own scoring system. To
achieve a unified coding system, individual indicator scores (variables) are collected
and normalised using the min-max method into a 0 – 10 system, where 10 indicates the
highest risk level.
As with any composite index, each variable then receives a weight to aggregate all
scores into one score. In this case, the variables used differ in quality, coverage
and relevance, with some components being more applicable than others in assessing
ML/TF risk.
The Basel AML Index therefore uses an expert weighting scheme (or so-called
“participatory approach”), whereby experts assign a weight for a variable based on
their in-depth knowledge and expertise in the matter.
Data collection for the 2022 Public Edition of the Basel AML Index was finished on 25 August 2022 and does not reflect developments after that date. The Expert Edition is updated quarterly.
There is not always a complete set of 18 indicators available for all jurisdictions. A jurisdiction’s overall score is calculated based on available data only.
In addition, only jurisdictions with sufficient data to calculate a reliable ML/TF risk score are included in the Public Edition of the Basel AML Index. The Expert Edition contains a more comprehensive overview of all 203 jurisdictions with their risk scores and details of the available data.
Due to the above limitations, we recommend that the Basel AML Index Expert Edition, rather than the Public Edition, should be used for compliance or risk assessment purposes.
Use of the Expert Edition should also form part of a comprehensive, risk-based compliance programme along with additional indicators and procedures relevant to the organisation’s specific needs.
In contrast to financial risk models based purely on statistical calculations, the Basel AML Index evaluates structural factors by quantifying regulatory, legal, political and financial indicators that influence jurisdictions’ vulnerability to ML/TF. The Index relies partially on perception-based indicators such as Transparency International’s Corruption Perceptions Index.
Transforming qualitative data into quantitative data does not fully overcome the limitations of perception-based indicators. Unlike financial risk models, jurisdiction risk models cannot be used as a solid basis for prediction or for calculating potential loss connected to ML/TF.'
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 per 25 August 2022, 135 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.
In 2022, the following methodology changes were decided at the annual review meeting: