Basel Institute on Governance Basel AML Index 2022

The 11th annual edition of the Basel AML Index is out. The Netherlands is ranked 12th.

When it comes to tackling dirty money, most countries are taking one step forward and four steps back – and remaining too many steps behind criminals seeking to launder illicit funds.

Eleven years since the first publication of the Basel AML Index – a leading independent ranking of money laundering and terrorist financing (ML/TF) risks in countries around the world – progress in anti-money laundering and counter terrorism financing (AML/CFT) remains paralysed.

The average global money laundering risk according to this year’s Index is stuck at 5.25 out of 10, where 10 is the maximum risk level. A tiny decrease in risks relating to the quality of AML/CFT frameworks has been offset by increased risks in the other four areas measured by the Basel AML Index: corruption, financial transparency, public transparency, and political/legal risks.

The good news is that governments, as well as financial institutions and other reporting entities, are generally getting better at assessing their risks of money laundering and applying a risk-based approach to address them.

But in areas where criminals are moving fast and innovating, authorities are dragging their feet. The crypto sphere is one: average levels of compliance with international standards on risks from virtual assets are dropping dramatically as more countries are assessed.

Authorities are also progressing too slowly in areas that have long been a weak spot for ML/TF, such as beneficial ownership transparency and international cooperation.

Even where technical compliance with standards improves, effectiveness indicators often drop. In key weak spots such as beneficial ownership transparency and the quality of financial supervision, the gap is growing between technical compliance with the Recommendations of the Financial Action Task Force (FATF) and assessments of the effectiveness of measures in practice.

Progress matters because ML/TF weaknesses provide an easy way for criminals and corrupt networks to launder money stolen from citizens – from massive fraud schemes to corrupt procurement deals that hinder a country’s sustainable development. And for individual countries, poor performance in ML/TF can seriously impact business and investment opportunities.

And it matters because AML/CFT is about more than just fighting financial crime. It’s about protecting people and the environment, as the inclusion of an indicator of environmental crime in this year’s Index demonstrates.

The fight against money laundering is too important and too complex to tackle for governments alone. Using the full Expert Edition of the Basel AML Index, all stakeholders can gain a more in-depth understanding of their country’s main risks and weaknesses, thereby guiding efforts to effectively address them. Subscription is reasonably priced for private-sector entities and free of charge for public authorities, multilateral institutions and non-profit organisations, as well as the media, academia and civil society.