On July 23, the Basel Institute on Governance released its 2020 AML Index. The Index, which the Institute has published since 2012, assesses the risk of money laundering and terrorist financing (ML/TF) around the world. It provides risk scores based on data from 16 publicly available sources, such as the Financial Action Task Force (FATF), Transparency International, the World Bank, and the World Economic Forum.
The 2020 Index’s general conclusions included the following:
- Changes: The Index “remains unacceptably high at 5.22 out of 10, where 10 equals maximum risk.” Only six countries improved their scores by more than a single point, while 35 countries’ scores decreased.
- Quality of AML Supervision: Of the 100 countries that have been assessed so far with the new FATF assessment methodology, one-third scored a “zero for the effectiveness of their supervisory bodies and measures designed to safeguard financial systems from abuse.”
- Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Systems: Since the FATF moved to its fourth-round methodology, which the Institute noted “assess[es] not just the technical compliance of a country’s AML/CFT systems but their effectiveness in practice,” “most countries that undergo a fourth-round FATF evaluation rate poorly for effectiveness.”
The 2020 Index also includes a new indicator for human trafficking, the U.S. State Department’s Trafficking in Persons (TIP) Report. The Institute stated that this change “reflects the huge and growing proceeds generated by this transnational crime and laundered through international financial systems.”
The Public Edition of the 2020 Index includes scores and rankings for 141 countries, with the proviso that the FATF has not yet assessed many of those countries with its fourth-round methodology, which limits the comparability of those scores and rankings. (In the Index, the higher the score for a particular country, the greater the ML/TF risk, which translates to a higher ranking for that country.)
The following are some of the noteworthy data on specific countries:
- Highest and Lowest Rankings: The five highest-ranked (i.e., riskiest) countries were (1) Afghanistan (8.16), (2) Haiti (8.15), (3) Myanmar (7.86), (4) Laos (7.82), and (5) Mozambique (7.81). The five lowest-ranked countries were (141) Estonia (2.36); (140) Andorra (2.83), (139) Finland (2.97), (138) Bulgaria (3.12), and (137) the Cook Islands (3.13),
- Africa: In addition to Mozambique, other higher-ranked African countries included Sierra Leone (7/7.51), Senegal (8/7.3), Kenya (9/7.18), Angola (13/7.02), Nigeria (14/6.88), and Benin (15/6.85). South Africa ranked 87 (4.83), Ghana 85 (4.89), and Egypt 82(4.96).
- Asia: In addition to Afghanistan, Myanmar, and Laos, other higher-ranked Asian countries included Yemen (10/7.12), Cambodia (11/7.1), Vietnam (12/7.02), China (18/6.76), and Kyrgyzstan (27/6.32).
- Australia: Australia ranked 124 (3.84).
- Europe: The five highest-ranked European countries were Turkey (41/5.76), Bosnia-Herzegovina (47/5.63), Russia (52/5.51), Malta (53/5.48), and Serbia (54/5.47). The United Kingdom ranked 116 (4.02).
- North America: The United States ranked 100 (4.57), Canada 94 (4.68), and Mexico 68 (5.2).
- South America: The five highest-ranked South American countries were Nicaragua (16/6.78), Venezuela (20/6.56), Paraguay (24/6.45), Bolivia (31/6.12), and Panama (36/5.96).
- Caribbean: After Haiti, the next highest-ranked Caribbean countries were the Cayman Islands (6/7.64), the Bahamas (25/6.43), Jamaica (34/5.99), and Barbados (40/5.87).
Note: In its release concerning the AML Index, the Institute commented that the Index “will disappoint anyone wishing for tangible progress in combating money laundering and terrorist financing (ML/TF) around the world.” Seasoned AML/CTF observers, on the other hand, should simply make use of the Index and bear its data in mind as various authorities, such as the European Union, strive to strengthen the structure and implementation of regional and national AML/CTF frameworks.