The Basel Institute on Governance, “Basel AML Index 2021: 10th Public Edition - Ranking money laundering and terrorist financing risks around the world,“ 13 Sep 2021, measures the risk of money laundering and terrorist financing (ML / TF) in jurisdictions around the world. Published annually since 2012, the Basel AML Index remains the only independent, research-based index by a non-profit organization ranking jurisdictions according to their risk of ML / TF.
The aim of the Basel AML Index is to provide a holistic picture of money laundering risk via 17 indicators
Domain 1: Quality of AML / CFT Framework (65%)
FATF Mutual Evaluation Reports (35%)
Tax Justice Network Financial Secrecy Index (20%)
US State Department International Narcotics Control Strategy Report (INCSR) (5%)
US State Department Trafficking in Persons (TIP) Report (5%) (added as an indicator in Apr 2021)
Domain 2: Corruption Risk (10%)
Transparency International Corruption Perceptions Index (5%)
TRACE Bribery Risk Matrix (5%)
Domain 3: Financial Transparency and Standards (10%)
World Bank Extent of Corporate Transparency Index (2.5%)
WEF Global Competitiveness Report – Strength of auditing and reporting standards (5%)
World Bank IDA Resource Allocation Index – Financial sector regulations (2.5%)
Domain 4: Public Transparency and Accountability (5%)
International IDEA Political Finance Database – Political disclosure (1.66%)
International Budget Partnership Open Budget Index – Budget transparency score (1.66%)
World Bank IDA Resource Allocation Index – Transparency, accountability and corruption in the public sector (1.66%)
Domain 5: Legal and Political Risk (10%)
Freedom House - Freedom in the World: political rights and civil liberties (1.67%)
Reporters Without Borders - World Press Freedom Index (0.83%)
WEF Global Competitiveness Report – Institutional pillar (2.5%)
WEF Global Competitiveness Report – Judicial independence (2.5%)
World Justice Project Rule of Law Index (2.5%)
Areas in Need of More Attention
This year’s Basel AML Index report looks at four areas of AML/CFT policy that urgently need more attention:
A stronger response to threats from virtual assets.
A greater focus on prevention of money laundering, not only enforcement.
Faster and more robust implementation of beneficial ownership transparency measures.
Addressing ML/TF vulnerabilities beyond the financial sector among lawyers, accountants, real estate agents and other DNFBPs.
Human Trafficking Highlights
Since 2020, around half of jurisdictions have increased their risk scores due to changes in risk data relating to human trafficking (Cyprus, Norway, Portugal, and Switzerland), bribery/ corruption (Hungary) and public transparency (Hungary, Finland).
Armenia saw the greatest improvement due to decreases in risk scores for human trafficking and corruption/bribery.
Risk scores in the East Asia and Pacific region are slightly higher than the global average, and many jurisdictions have increased their risks in the last year. There is significant variation in overall risk scores, as well as in risks relating to corruption/bribery, human trafficking, public and financial transparency, and political/legal systems.
High risks of human trafficking in China, Malaysia and Myanmar.
Haiti and Trinidad and Tobago received a higher risk score due to increased risks of human trafficking. Santa Lucia dropped by nearly a full point due to a poor FATF evaluation.
Although Israel remains the lowest-risk jurisdiction, its score worsened due to an increased risk score for human trafficking.
Zimbabwe’s risk score increased since 2020, due mostly to higher risks of human trafficking.
Full report (50 pages – Public Edition)
Press release (5 pages)