The Basel Anti-Money Laundering (AML) Index is an independent annual ranking that assesses the risk of money laundering and terrorist financing (ML/TF) around the world. Published by the Basel Institute on Governance since 2012, 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 risk scores cover five domains:
Quality of AML/Counter Financing of Terrorism (CFT) Framework
Bribery and Corruption
Financial Transparency and Standards
Public Transparency and Accountability
Legal and Political Risks
The “Basel AML Index: 9th Public Edition Ranking Money Laundering and Terrorist Financing Risks Around The World,” covers 141 countries with sufficient data to calculate a reliable ML/TF risk score. The Basel AML Index is developed and maintained by the Basel Institute’s International Centre for Asset Recovery (ICAR). It is recommended in leading publications relating to money laundering risk assessment, including the Economist, Wolfsberg Group and European Commission.
In April 2021, a new indicator on human trafficking was added to the methodology, which now draws on 16 indicators (see Annex II, beginning on page 36, for complete list) in the above five categories. Data from the annual Trafficking in Persons (TIP) Report published by the US Department of State (DOS) on countries’ efforts to combat human trafficking, is now included in domain 1 “Quality of AML/CFT Framework,”with a 5% weighting.
8.1 Domain 1: Quality of AML /CFT Framework
US State Department Trafficking in Persons (TIP) Report
Type: Expert assessment
What does it measure? The TIP Report, produced by the US Department of State Office to Monitor and Combat Trafficking in Persons, ranks countries based on their perceived efforts to acknowledge and combat human trafficking. Countries are classed into four tiers reflecting their compliance with standards of the Trafficking Victims Protection Act (TVPA) of 2000.
Why is it important? According to the United Nations Office on Drugs and Crime (UNODC), trafficking of human beings is the third-largest source of income for organized crime groups after drug and arms trafficking (“Trafficking In Persons And Smuggling Of Migrants,” 14 April 2015; human trafficking is ranked fourth of the top four illicit activities according to Global Financial Integrity, “Transnational Crime and the Developing World,“ Mar 2017). According to the Organization for Security and Cooperation in Europe (OSCE), human trafficking annually generates an estimated USD 150 billion in profits (figure originally reported in International Labor Organization (ILO), “Profits and Poverty: The Economics of Forced Labor,” May 2014). According to the Financial Action Task Force (FATF), “Financial Flows from Human Trafficking,” July 2018, report, human trafficking is among the most profitable sources of income for organized crime and often a predicate offense to money laundering.