Major Money Laundering Countries

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


What Is The Basel AML Index?


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


Each year Basel prepares an independent score and ranking that assesses the risk of money laundering and terrorist financing in the world. 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. Risk scores cover five areas:

  • Quality of AML / CFT framework
  • Bribery and corruption
  • 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. 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 global. The average risk score across all 141 countries on the list remains unacceptably high, at 5.22 out of 10. 10 here is equal to the maximum risk. Only six countries have increased their scores more than once. 35 countries went backward. However, many countries' financial systems are extremely vulnerable to money laundering, terrorist financing, and related crimes.


SCORES AND RANKING

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).


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 Caribbean
  • Middle East and North Africa
  • North America
  • South Asia
  • Sub-Saharan Africa


1)European Union and Western Europe

The region generally has a lower risk than the global average. Its biggest shortcoming is the quality of AML / CFT frames.


  • Overall risk score is 4.01
  • Quality of 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 a significant money-laundering destination. High levels of financial secrecy undermine AML/CFT frameworks in Switzerland, Luxembourg, Netherlands, and the UK


2)Europe and Central Asia

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


  • Overall risk score is 5.22
  • Quality of 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 areas are Corruption and issues with political and civil rights, media freedom, and the judiciary's independence. We list three-quarters of the countries as major 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 quality of the AML / CFT framework itself and underperformance regarding public transparency and accountability. In both areas, technical and legal adjustments and effective implementation would need to be the focus of future reform.


  • Overall risk score is 5.46
  • Quality of 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)


Weakest area is the quality of AML/CFT frameworks. We list nearly half of all countries as a major money-laundering destination - 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 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.


  • Overall risk score is 5.36
  • Quality of 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)


Weakest areas are corruption and bribery. We list almost %90 of 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)Middle East and North Africa

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


  • Overall risk score is 5.51
  • Quality of 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 as having 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 better than the worldwide average in all categories, but clearly, the head start over the rest of the world is very minimal when it comes to the basic AML/CFT framework.


  • Overall risk score is 4.72
  • Quality of 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; Quality of AML/CFT frameworks. Canada and Us, listed in the US INCSR as major money laundering jurisdictions. The US is rated as having the highest financial secrecy risks in the region and one of the highest risks globally.


7)South Asia

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


  • Overall risk score is 6.4
  • Quality of AML / CFT framework is 6.74
  • Bribery and 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) Weakest area is the quality of AML/CFT frameworks. We list Afghanistan, India, and Pakistan as major money laundering jurisdictions. The region faces high risks of human trafficking, including the highest risk in Afghanistan.


8)Sub-Saharan Africa

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


  • Overall risk score is 6.33
  • Quality of 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)

Weakest area is quality of AML/CFT framework. We list half of the countries as major money laundering destinations. The region suffers from a lack of data on AML/CFT and related risks.


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 with the effectiveness of their measures.


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