Major Money Laundering Countries

The area displays notable diversity among countries, with considerable differences in the quality of their AML/CFT frameworks despite a seemingly low average risk score. Challenges are evident in the efficacy of AML/CFT supervision, preventive measures, and the transparency of beneficial ownership systems across several nations. Moreover, there is a notable range in the prevalence of corruption and bribery, experiencing an uptick from 2.91 in 2022 to 3.15 in 2023.

2. Eastern Europe and Central Asia

In 2023, there was a marginal improvement in the average scores related to the quality of AML/CFT frameworks. Nevertheless, risks surged in various other areas, encompassing corruption and bribery, public and financial transparency, as well as political and legal risks. The repercussions of these developments are more pronounced for the citizens of the region than for global financial security, as, with the exception of Türkiye, the region lacks substantial or international financial centers.

• The overall risk score is 5.16
• The quality of the AML / CFT framework is 4.99
• Bribery and corruption 6.08
• Financial transparency and standards 5.13
• Public transparency and accountability 4.05
• Legal and political risk 5.82

It is not reflected in the indicators used by the Basel AML Index and, therefore, did not affect Russia's overall risk score. 

3. East Asia and Pacific

Significant disparities in risk levels are evident across various aspects, including corruption and bribery, human trafficking, environmental crime, public and financial transparency, as well as the political and legal system within this region. Approximately one-third of the jurisdictions are identified as high-risk. Similar to the situation in Latin America, the profits derived from drug trafficking raise particular apprehension, with 40 percent of countries being identified by the US International Narcotics Control Strategy Report as significant money laundering jurisdictions in this context. The effectiveness of AML/CFT measures aimed at preventing the proliferation of weapons of mass destruction is generally subpar, as are the measures pertaining to prevention and transparency in beneficial ownership.

• The overall risk score is 5.47
• The quality of the AML / CFT framework is 5.95
• Bribery and corruption 4.55
• Financial transparency and standards 5.13
• Public transparency and accountability 4.44
• Legal and political risk 3.90

4. Latin America and the Caribbean

The majority of nations in Latin America exhibit moderate risks of money laundering and terrorist financing, with Haiti, Venezuela, and Suriname notably contributing to a decline in the regional average. A predominant source of money laundering risk continues to be drug trafficking, with only three countries—Chile, Grenada, and Uruguay—escaping inclusion in the US list of "major money laundering jurisdictions" in this context. While the quality of AML/CFT frameworks has remained consistent this year, there has been an increase in risks associated with corruption and bribery.

• The overall risk score is 5.40
• The quality of the AML / CFT framework is 5.52
• Bribery and corruption 5.42
• Financial transparency and standards 5.77
• Public transparency and accountability 4.66
• Legal and political risk 4.63

90% of the assessed territories are listed as “money laundering jurisdictions” by the US. There are significant differences across the region, indicating different institutional capacities to mitigate risks.

5. The Middle East and North Africa

The risk score for this region deteriorated in the current year. Although there was a marginal enhancement in the field of AML/CFT frameworks, which represented the region's weakest aspect last year, environmental crime risks within this domain continue to be assessed as low or medium. On the contrary, various other indicators, such as corruption and bribery, public and financial transparency, as well as political and legal risks, all experienced a decline.

• The overall risk score is 5.16
• The quality of the AML / CFT framework is 4.99
• Bribery and corruption 6.08
• Financial transparency and standards 5.13
• Public transparency and accountability 4.05
• Legal and political risk 5.82

There have been no substantial changes in the situation for either the United States or Canada. The risks within the AML/CFT framework persist at a level twice as high as other measured risk areas according to the Basel AML Index. Weaknesses persist in the transparency of beneficial ownership information for both countries, with the impact of new legislation expected to manifest over time contingent on the effectiveness of the implementation of beneficial ownership information systems. Another persisting concern is the efficacy of preventive measures applied to financial institutions and designated non-financial businesses and professions, often referred to as potential "enablers."

• The overall risk score is 4.29
• The quality of the AML / CFT framework is 5.24
• Bribery and corruption 2.32
• Financial transparency and standards 2.72
• Public transparency and accountability 2.52
• Legal and political risk 2.50

7. South Asia

The overall performance in the Basel AML Index has shown improvement throughout South Asia this year. However, a significant portion of this positive trend is attributed to Sri Lanka and Pakistan graduating from the FATF grey list. The methodological changes implemented this year contributed to enhancements in the region's average score concerning the quality of AML/CFT frameworks, which was identified as the weakest area in the previous year. Additionally, there were positive improvements in indicators related to financial transparency.

• The overall risk score is 5.64
• The quality of the AML / CFT framework is 5.73
• Bribery Corruption 5.85
• Financial transparency and standards 5.73
• Public transparency and accountability 4.61
• Legal and Political Risk 5.25

8. Sub-Saharan Africa

New FATF evaluations for 10 countries led to a huge increase in country coverage this year. Despite this, average ML/TF risks remain higher than the global average. Nearly two-thirds of jurisdictions in this region fall into the high-risk category. Nearly a third of jurisdictions in the region score the lowest possible level for the effectiveness of AML/CFT measures. Of particular concern, given the region’s security issues, is weak performance when it comes to the effectiveness of measures to prevent the proliferation of weapons of mass destruction and the misuse of non-profit organizations for terrorist financing. 

• The overall risk score is 6.54
• The quality of the AML / CFT framework is 6.88
• Bribery and corruption 6.36
• Financial transparency and standards 6.30
• Public transparency and accountability 5.31
• Legal and political risk 5.34

What Can Be Done to Improve Supervision Generally?

To enhance regulatory supervision and the effectiveness of implementation, several strategic actions should be undertaken:

1. Strengthen Regulatory Frameworks

• Align with International Standards: Regularly update and refine regulations to align with international standards, such as those set by the Financial Action Task Force (FATF).
• Address Emerging Risks: Adapt regulations to address new risks and evolving money laundering and terrorist financing techniques.

2. Build Capacity of Regulatory Bodies

• Invest in Resources: Allocate sufficient resources to regulatory and supervisory bodies.
• Enhance Training: Provide training programs and expertise to ensure effective supervision and implementation of AML and counter-terrorism financing measures.

3. Adopt a Risk-Based Approach

• Optimize Resource Allocation: Focus resources on higher-risk areas and entities.
• Prioritize High-Risk Targets: Use a targeted approach to make supervision more efficient and effective.

4. Foster Collaboration and Information Sharing

• Strengthen Cooperation: Improve collaboration between regulatory bodies, financial institutions, law enforcement agencies, and international organizations.
• Facilitate Information Exchange: Share intelligence and best practices to enhance coordinated supervision efforts.

5. Regularly Monitor and Evaluate Supervision

• Conduct Comprehensive Assessments: Perform regular audits and evaluations of regulatory practices.
• Identify and Address Gaps: Use feedback to address weaknesses and improve supervisory strategies.

6. Engage with the Private Sector

• Establish Communication Channels: Create an effective dialogue with financial institutions and industry professionals.
• Share Insights and Experiences: Collaborate to develop practical and effective supervisory approaches.

7. Leverage Technological Advancements

• Utilize Sanction Scanner: Employ advanced tools like Sanction Scanner to enhance supervision efficiency.
• Real-Time Screening: Access global sanctions lists, PEP databases, and adverse media sources for real-time monitoring.
• Advanced Analytics: Utilize AI-driven algorithms to detect patterns, anomalies, and suspicious activities.
• User-Friendly Interface: Streamline compliance processes with a user-friendly platform that simplifies documentation and reporting.

By implementing these strategies and integrating advanced technologies such as the Sanction Scanner, regulatory bodies can significantly improve their supervisory practices. This approach enhances compliance with AML/CFT standards and strengthens the ability to detect and prevent illicit financial activities.