2024-12-02

The 13th Public Edition of the Basel AML Index highlights a gradual improvement in national systems to counter money laundering – at least in terms of technical compliance with global standards, and among countries with long-standing weaknesses. But the effectiveness of anti-money laundering systems in practice remains alarmingly low in the face of evolving threats from fraud and other complex, often transnational financial crimes.

Developed and maintained by the Basel Institute on Governance since 2012, the Basel AML Index is an independent, data-based ranking and risk assessment tool for money laundering and related financial crime risks around the world.

At the heart of the Basel AML Index is a ranking of countries and jurisdictions according to their vulnerability to money laundering and related financial crimes and their capacity to counter these threats. This year 164 countries are included in the Public Edition, with Myanmar, Haiti and the Democratic Republic of the Congo receiving the highest risk scores and Finland, Iceland and San Marino the lowest.

Compliance up, effectiveness down

The 2024 Basel AML Index report highlights current trends and debates around the fight against financial crime, including:

1. A 12 percentage point improvement in technical compliance with Financial Action Task Force (FATF) standards over the last decade among countries with available data.

• Specific areas of improvement include targeted financial sanctions, measures to address higher-risk countries and politically exposed persons, and customer due diligence by designated non-financial businesses and professions (DNFBPs) like lawyers, accountants and gambling businesses.
• Countries with major deficiencies appear to be catching up, in some cases as a result of being on the FATF’s so-called grey list of jurisdictions subject to increased monitoring.

2. The effectiveness of anti-money laundering measures globally as measured by the FATF remains stagnant at just 28 percent, down from 30 percent in 2021.

• The gains in technical compliance with the standards are not translating into effective investigations, prosecutions or sanctions for financial crimes – the weakest spot at 20 percent effectiveness.
• Beneficial ownership transparency remains a major weakness at 21 percent effectiveness, down by a percentage point from last year.
• And despite significant investments in anti-money compliance by the private sector, globally the average effectiveness of preventive measures and suspicious transaction reporting by financial institutions and DNFBPs has sunk to 22 percent from 24 percent last year.

3. The inclusion of fraud indicators in the Basel AML Index methodology this year has increased risk scores for high-income countries and those with large financial centres.

• But there are too many unknown unknowns – no clear definition or standards, no methodology for assessing risk, severe underreporting and numerous constantly changing typologies.
• If we are to get a grip on the rising threats from fraud and its impacts on people, businesses and governments everywhere, global coordination on standards, definitions and data collection are urgently needed.

What does success look like?

Kateryna Boguslavska, who leads the development of the Basel AML Index and provides technical assistance to countries seeking to understand and address their anti-money laundering deficiencies, comments that:

“The stark gap between technical compliance and effectiveness with regard to FATF standards raises concerns about whether investments in anti-money laundering systems are leading to tangible results. But financial crime is a multi-dimensional and fast-evolving phenomenon with significant social, political and economic implications. We cannot assess success by looking at systems in isolation; it’s important to consider broader factors such as financial transparency, civil liberties, media freedom and judicial independence.

That’s why the Basel AML Index provides data on these factors, alongside indicators of fast-evolving threats like environmental crime and fraud.”

Ultimately, the Basel AML Index report calls for a shared reimagining of the fight against financial crime as key to achieving broader societal goals relating to peace, justice and sustainable development, rather than limiting our ambitions to the protection of financial systems and economies.

About the Basel AML Index

The Basel AML Index is an independent, data-based ranking and risk assessment tool for money laundering and related financial crime risks around the world. It provides risk scores based on data from 17 publicly accessible sources. The risk scores cover five domains relevant to assessing risks of money laundering at the country or jurisdiction level:

• Quality of AML/CFT/CPF framework
• Corruption and fraud
• Financial transparency and standards
• Public transparency and accountability
• Legal and political risks

The Basel AML Index is developed and maintained by the Basel Institute on Governance through its International Centre for Asset Recovery (ICAR). ICAR benefits from core funding from the Governments of Jersey, Liechtenstein, Norway, Switzerland and the UK.

Learn more

• The full Basel AML Index report, plus free-to-use images and regional maps, are available on the Basel AML Index website (Downloads).
• A launch event and panel discussion will take place on Wednesday 4 December at 15:00 CET.
• Representatives of public, non-profit, multilateral and academic organisations, as well as the media, may request free access to the Basel AML Index Expert Edition and Expert Edition Plus. These subscription-based services offer comprehensive data on the 17 indicators that make up the Basel AML Index score and allow for a more in-depth analysis of individual countries, regions or risk factors.