The Basel Institute on Governance recently released the 9th Basel AML Index, underscoring the state of the world’s AML/CFT progress. Unfortunately, the average ML/TF risk score for 141 countries is 5.22 out of 10, where 10 implies maximum risk. Moreover, only six countries showed improvements in their scores beyond one point. In fact, the scores for 35 countries exacerbated compared to their previous scores. Clearly, several countries are highly vulnerable to financial crimes including ML and TF.
The Basel AML Index has identified poor implementation and efficiency of AML measures as the primary issues responsible for this high vulnerability. This has been particularly true since the FATF started using its fourth-round evaluation methodology to evaluate both compliance and effectiveness of a country’s AML/CFT framework. Thus, even if many countries have seemingly strong AML/CFT systems, they are lacking in efficacy.
The Basel AML Index 2020 also includes a new indicator for human trafficking which highlights the increasing contribution of this transnational crime to overall criminal proceeds and their international money-laundering. In general, the Basel AML Index 2020 points towards the growing need for governments to evaluate the risks that their respective jurisdictions face so that a permanent reform may be initiated.
