Major Money Laundering Countries

Blog / Major Money Laundering Countries

In recent years, money laundering has been rapidly growing. So the amount of dirty money. Governments and financial institutions try to protect themselves from this crime.

What is The BSA AML Index?

Basel Institute of Governance is an independent, international, non-profit organization committed to preventing and combCorruptionuption and other financial crime. The organization was established in Basel, Switzerland.

Each year, Basel prepares an independent score and ranking that assesses the world's risk of money laundering and terrorist financing. This ranking is the Basel AML Index. This year (2020) published the ninth raid. Published by the Basel Institute of Governance since 2012, this document gives risk scores based on data from 15 publicly available sources such as the Financial Action Task Force (FATF), the World Bank, and the World Economic Forum. FATF country's risk scores cover five areas:

  • Quality of AML / CFT framework
  • BriberCorruptionuption
  • Financial transparency and standards
  • Public transparency and accountability
  • Legal and Political Risks

The primary objective is not to rank countries superficially compared to each other but to give an overall view of different countries 'and regions' risk levels and their progress in addressing vulnerabilities over time. For example, the average money laundering risk increased compared to last year, as the Basel Institute of Management published the 2020 anti-money laundering index, which assesses the risks of money laundering / terrorist financing of 141 countries.

Basel AML Index 2020: Weak oversight and dormant systems leave countries' doors open to money laundering. The 2020 Basel AML index disappointed everyone seeking concrete progress in fighting money laundering and terrorist financing globally. The average risk score across all 141 countries on the list remains unacceptably high, at 5.22 out of 10. Ten here is equal to the maximum risk. Only six countries have increased their scores more than once. Thirty-five countries went backward. However, many countries' financial systems are highly vulnerable to money laundering, terrorist financing, and related crimes.

Scores and Ranking

The top 10 countries with the highest AML risk are Afghanistan (8.16), Haiti (8.15), Myanmar (7.86), Laos (7.82), Mozambique (7.82), Cayman Islands (7.64), Sierra Leone (7.51), Senegal (7.30), Kenya (7.18), Yemen (7.12).

The top 10 countries with the lowest AML risks are Estonia (2.36), Andorra (2.83), Finland (2.97), Bulgaria (3.12), Cook Islands (3.13), Norway (3.19), New Zealand (3.24), Sweden (3.32), Slovenia (3.35), Denmark (3.46)

Regional Focus

The Basel AML Index follows the World Bank classification of countries, with an additional separation of Europe and Central Asia into two regions:

  • European Union and Western Europe
  • Europe and Central Asia
  • East Asia and Pacific
  • Latin America and the Caribbean
  • The Middle East and North Africa
  • North America
  • South Asia
  • Sub-Saharan Africa

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1)European Union and Western Europe

In this region, countries' money laundering risk rating is generally lower than the global average. Its biggest shortcoming is the quality of AML / CFT frames.

  • The overall risk score is 4.01
  • The quality of the AML / CFT framework is 4.6
  • Bribery and corruption 3.16
  • Financial transparency and standards 3.26
  • Public transparency and accountability 1.93
  • Legal and political risk 2.89

Countries are; Estonia (2,36), Andorra (2,83), Finland (2,97), Bulgaria (3,12), Norway (3,19), Sweden (3,32), Slovenia (3,35), Denmark (3,46), Lithuania (3,51), Spain (3,66), Portugal (3,66), Greece (3,73), France (3,92), Slovakia (3,95), Croatia (3,95), Belgium (3,98), United Kingdom (4,02), Iceland (4,25), Czech Republic (4,29), Poland (4,36), Austria (4,38), Germany (4,42), Ireland (4,46), Netherlands (4,56), Italy (4,61), Latvia (4,62), Switzerland (4,74), Luxembourg (4,74), Romania (4,79), Cyprus (4,81), Hungary (4,99), Malta (5,48)

We list Belgium, Cyprus, Malta, Netherlands, Spain, and the UK as significant money-laundering destinations. In addition, high levels of financial secrecy undermine AML/CFT frameworks in Switzerland, Luxembourg, the Netherlands, and the UK.

2)Europe and Central Asia

The risk average of the region is close to the global average. WeakneCorruptionuption, bribery, and legal and political risks

  • The overall risk score is 5.22
  • The quality of the AML / CFT framework is 5.28
  • Bribery and corruption 5.93
  • Financial transparency and standards 5.16
  • Public transparency and accountability 2.85
  • Legal and political risk 5.73

Countries are; Montenegro (3,75), North Macedonia (3,98), Georgia (4,54), Armenia (5,00), Kazakhstan (5,08), Moldova (5,14), Ukraine (5,23), Azerbaijan (5,24), Serbia (5,47), Russia (5,51), Bosnia-Herzegovina (5,63), Albania (5,69), Uzbekistan (5,71), Turkey (5,76), Tajikistan (6,02), Kyrgyztan (6,32)

The weakest area is Corruptionuption and issues with political and civil rights, media freedom, and the judiciary's independence. We list three-quarters of the countries as significant money laundering destinations. The area faces high risks of human trafficking, with the highest exposure level in Russia.

3)East Asia and Pacific

The region's risk average is slightly higher than the global average. The most prominent weaknesses relate to the AML / CFT framework's quality and underperformance regarding public transparency and accountability. In both areas, technical and legal adjustments and effective implementation would focus on future reform.

  • The overall risk score is 5.46
  • The quality of the AML / CFT framework is 6.08
  • Bribery and corruption 4.41
  • Financial transparency and standards 4.68
  • Public transparency and accountability 4.08
  • Legal and political risk 3.91

Countries are; Cook Islands (3,13), New Zealand (3,24), Australia (3,84), Taiwan-China (4,31), Singapore (4,56), South Korea (4,61), Indonesia (4,62), Hong Kong SAR-China (4,99), Japan (5,16), Malaysia (5,25), Samoa (5,27), Vanuatu (5,29), Marshall Islands (5,57), Philippines (5,67), Macao SAR-China (5,72), Thailand (6,01), Mongolia (6,24), China (6,76), Vietnam (7,04), Cambodia (7,10), Laos (7,82), Myanmar (7,86)

The weakest area is the quality of AML/CFT frameworks. We list nearly half of all countries as major money-laundering destinations - China, Hong Kong, Indonesia, Laos, Macao, Malaysia, Myanmar, Philippines, Thailand, and Vietnam. Hong Kong, Japan, Singapore, and Taiwan face the most massive issues with financial secrecy.

4)Latin America and the Caribbean

Only around half of the countries in this area have undergone a FATF fourth-round evaluation. The primary deficiencies lie in high levels of corruption and bribery, low financial transparency levels, and weak public transparency and accountability.

  • The overall risk score is 5.36
  • The quality of the AML / CFT framework is 5.39
  • Bribery and corruption 5.77
  • Financial transparency and standards 5.59
  • Public transparency and accountability 4.41
  • Legal and political risk 4.7

Countries are; Chile (3,82), Dominica (3,88), Uruguay (3,94), Grenada (4,12), St. Lucia (4,25), St. Vinvent and the Grenadines (4,48), Peru (4,53), Colombia (4,62), Trinidad and Tobaga (4,75), Costa Rica (4,76), El Salvador (4,87), Ecuador (4,89), Brazil (5,02), Dominican Republic (5,05), Antigua and Barbuda (5,07), Argentina (5,08), Guatemala (5,10), Mexico (5,20), Aruba (5,34), Turks and Caicos (5,35), Guyana (5,40), Honduras (5,54), Belize (5,64), Barbados (5,87)

The weakest areas are corruption and bribery. We list almost %90 countries as significant money laundering destinations -exceptions are the Turks and Caicos, Grenada, Chile, and Uruguay. The Cayman Islands, Bahamas, and Panama face the most massive issues with financial secrecy.

5) The Middle East and North Africa

Risk levels in this region are higher than the global average across the board. The discrepancy to the worldwide standard in the Public Transparency and Accountability category is particularly striking and needs urgent attention.

  • The overall risk score is 5.51
  • The quality of the AML / CFT framework is 5.79
  • Bribery and corruption 5.23
  • Financial transparency and standards 4.29
  • Public transparency and accountability 5.79
  • Legal and political risk 5.07

Countries are; Israel (3,62), Bahrain (4,41), Egypt (4,96), Saudi Arabia (5,33), Lebanon (5,33), Tunisia (5,40), Morocco (5,54), Qatar (5,87), United Arab Emirates (5,89), Jordan (5,96), Algeria (6,74), Yemen (7,12) Weakest areas are public transparency and accountability. The US lists Algeria, Morocco, and the UAE as significant money laundering jurisdictions. Algeria, Qatar, and the UAS rate have the highest levels of financial secrecy.

6)North America

Though containing only three countries, this region plays a huge part in global financial markets. Their scores are better than the worldwide average in all categories, but clearly, the head start over the rest of the world is very minimal for the basic AML/CFT framework.

  • The overall risk score is 4.72
  • The quality of the AML / CFT framework is 5.51
  • Bribery and corruption 3.53
  • Financial transparency and standards 2.72
  • Public transparency and accountability 1.33
  • Legal and political risk 2.23

Countries are; United States (4,57), Canada (4,68), Bermuda (4,91) Weakest area; the Quality of AML/CFT frameworks. Canada and the Us are listed in the US INCSR as significant money laundering jurisdictions. The US has the highest financial secrecy risks in the region and one of the most increased risks globally.

7)South Asia

The region has the highest overall risk score and exceeds the global average across all categories. Significant deficiencies are the quality of AML/CFT framewCorruptionuption, and bribery.

  • The overall risk score is 6.4
  • The quality of the AML / CFT framework is 6.74
  • Bribery Corruption 6.71
  • Financial transparency and standards 5.79
  • Public transparency and accountability 4.35
  • Legal and political risk 5.56

Countries are; India (5,15), Bangladesh (5,88), Pakistan (6,30), Sri Lanka (6,52), Afghanistan (8,16).   The weakest area is the quality of AML/CFT frameworks. We list Afghanistan, India, and Pakistan as significant money laundering jurisdictions. Also, they called high-risk countries. The region faces high risks of human trafficking, including the highest risk in Afghanistan. 

FAFT High-Risk and Monitored Jurisdictions

8)Sub-Saharan Africa

This region has the second-highest overall risk score and is significantly below average across all categories. Moreover, the risk scores are likely to rise even higher after more countries are evaluated with the FATF fourth-round methodology.

  • The overall risk score is 6.33
  • The quality of the AML / CFT framework is 6.79
  • Bribery and corruption 5.91
  • Financial transparency and standards 5.90
  • Public transparency and accountability 4.7
  • Legal and political risk 5.07

Countries are; South Africa (4,83), Ghana (4,89), Botswana (5,06), Gambia (5,29), Mauritius (5,33), Seychelles (5,59), Liberia (6,25), Tanzania (6,39), Cape Verde (6,52), Zimbabwe (6,54), Cote d’Ivoire (6,78), Benin (6,85), Nigeria (6,88), Angola (7,02), Kenya (7,18), Senegal (7,30), Sierra Leone (7,51), Mozambique (7,81)

The weakest area is the quality of the AML/CFT framework. We list half of the countries as significant money laundering destinations. The region suffers from a lack of data on AML/CFT and related risks. In this region, some of the countries include FATF high-risk countries. 

What Is Wrong, And What Can Be Done To Improve Supervision Generally?

Supervision is very much at the intersection between regulation and implementation, for example, technical compliance with AML/CFT standards and their enforcement. Looking at data from recent FATF reports, we see that while countries generally have low or mediocre scores for technical compliance, the most problematic issue is the effectiveness of their measures.

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