The Basel Institute of Governance has compiled and released its fifth Anti-Money Laundering Index through its International Centre for Asset Recovery.
Only countries that offer enough data for the Swiss body to calculate a reliable ML/TF risk score are included in the index; the others are countries with "less than 50% of the overall variables." The ranking covers 129 jurisdictions in all. The worst regulated and most risky country, in first place, is Tajikistan. The least risky is Finland, in 129th place.
The Overall Score indicates a country’s risk level in money laundering/terrorist financing based on its adherence to AML/ATF standards and other risk categories such as financial regulations, public transparency, corruption and the rule of law.
In the top ten - posing the highest risk - are among the world's poor countries, including Mozambique, Afghanistan, Laos, Guinea-Bissau, Burma/Myanmar, Cambodia, Liberia, Kenya and Vietnam.
Among the world's slightly more developed economies, notable entries include Turkey (38th); Ukraine (39th); China (40th); the Philippines (43rd); Russia (47th); Indonesia (52nd); South Africa (63rd); India (68th); Mexico (72nd).
Still more developed are Taiwan (73rd); Japan (75th); Italy (77th); Saudi Arabia (81st); the United States (82nd); Brazil (83rd); Canada (86th); Holland (88th); South Korea (92nd); Portugal (93rd); Iceland (94th); Greece (96th); Belgium (100th); Spain (101st); Germany (102nd); the United Kingdom (106th); Chile (109th); the Czech Republic (111st); Norway (112nd); France (113rd); Denmark (114th); Australia (115th); Sweden (122nd); New Zealand (126th); Lithuania (127th); and Estonia (128th).
Offshore centres on the index, as defined at varying times by the International Monetary Fund and running from the allegedly most contaminated to the least, are: Panama (34th); Marshall Islands (44th); United Arab Emirates (53rd place); Malaysia (containing Labuan) (57th); Switzerland (64th); Bahrain (65th); Hong Kong (71st); Luxembourg (76th); Cyprus (80th); Mauritius (85th); Ireland (95th); Singapore (97th); St Lucia (98th); St Vincent & the Grenadines (99th); Grenada (107th); Dominica (108th); Latvia (117th); Malta (118th). International financial centres that feature on other lists are Lebanon (42nd); Liberia (8th place); Trinidad & Tobago (69th); Qatar (79th); Austria (105th) and Israel (120th).
The Basel Institute obtains its data by aggregating various publicly available sources. In the first stage, it looks at money laundering and associated problems before selecting the indicators for the job. It then 'weighs' those indicators according to their importance, having taked to academic, financial and AML experts. It holds an annual review meeting with these people to verify the quality of data, the date, country coverage and methodology.
Only countries with data for two out of the three indicators in the ML/TF category are included in the ranking. In previous years the proportion was 8 out of 14, so the change has resulted in 17 countries being removed from the ranking.
Basel AML Index scores are based on 14 indicators from the follwing publicly available sources.
- Financial Action Task Force Mutual Evaluation Reports.
- Transparency International's Financial Secrecy Index.
- The US State Department's International Narcotics Control Strategy Report (INCSR), which is full of mistakes.
- Transparency International's Corruption Perception Index.
- The World Bank's Extent of Corporate Transparency Index.
- The World Economic Forum's Global Competitiveness Report – strength of auditing and reporting standards.
- The World Economic Forum's Global Competitiveness Report – regulation of securities exchanges.
- The World Bank International Development Association Resource Allocation Index – financial sector regulations.
- The International Institute for Democracy and Electoral Assistance's Political Finance Database – political disclosure.
- The Open Budget Index – budget transparency score.
- The World Bank International Development Association Resource Allocation Index – transparency, accountability and corruption in the public sector.
- Freedom House: Freedom in the World and Freedom of the Press
- The World Economic Forum's Global Competitiveness Report – institutional pillar.
- The Rule of Law Index.
The first three relate to the quality of countries' AML regimes, and account for 65% of the overall score. The fourth, which accounts for 10%, is to do with "corruption risk." The following four are to do with financial transparency and standards, and acccount for 15% of the total score. The next three, to do with "public transparency and accountability," have a weighting of only 5%. The final three, to do with political and legal risks, also account for 5%.