Ask Mat – Tell me about the Basel AML Index 2024 and why it's important

The Basel AML Index 2024 provides a critical snapshot of money laundering and related financial crime risks across 164 jurisdictions. Published by the Basel Institute on Governance, this independent ranking remains a vital tool for AML and compliance professionals.

The Basel AML Index 2024 is the 13th annual report published by the Basel Institute on Governance. This index is an independent, data-based ranking and risk assessment tool that evaluates the risk of money laundering and related financial crimes worldwide.

🔑 Key Features:

• Risk Scores:

• The index provides risk scores for 164 countries and jurisdictions based on data from 17 publicly accessible sources, including
• The Financial Action Task Force (FATF),
• Transparency International and
• The Global Initiative against Transnational Organized Crime

• Domains Covered: The risk scores cover five key domains:

• Quality of AML/CFT/CPF framework
• Corruption and fraud risks
• Financial transparency and standards
• Public transparency and accountability
• Legal and political risks

🔑 Holistic Picture:

• The index aims to provide a comprehensive view of money laundering risks by combining various indicators that reflect different aspects of these risks.
• The Basel AML Index is a valuable tool for policymakers, regulators, and financial institutions to understand and mitigate the risks associated with money laundering and financial crimes.

🔑 Why It’s Important:

1. Risk Awareness: It helps countries and financial institutions understand their vulnerabilities to money laundering and related financial crimes.
2. Policy Development: Policymakers can use the index to develop and implement more effective anti-money laundering (AML) and counter-terrorist financing (CTF) measures.
3. Transparency: The index promotes greater transparency and accountability in financial systems by highlighting risk areas.
4. Global Standards: It encourages countries to adhere to international standards set by organisations like the Financial Action Task Force (FATF).
5. Resource Allocation: Helps prioritise resources and efforts to areas with higher risks, ensuring more efficient use of resources.

🔑 Key Insights from the 2024 Report:

• ➡️ New Focus on Fraud:

• Fraud has been incorporated into the methodology, reflecting its growing role as a predicate offence for money laundering. This adjustment increased risk scores in high-income countries, including New Zealand, Switzerland, and the UK.

• ➡️ Effectiveness Challenges Persist:

• While technical compliance with FATF standards has improved, the global effectiveness of AML measures remains low at just 28%. Investigations, prosecutions, and asset confiscation continue to be critical weak points.

• ➡️ Regional Disparities:

• The highest-risk regions remain Sub-Saharan Africa and Latin America, while Europe and North America showed increased risks in financial transparency and fraud indicators.

• ➡️ Grey List Insights:

• The report highlights misconceptions about FATF’s grey list, noting its potential to catalyse reforms rather than being purely punitive.

• ➡️ Need for Broader Impact:

• The fight against financial crime must align with global goals of justice, peace, and sustainable development, shifting beyond technical compliance to tangible societal benefits.

Source: 

(1) Basel AML Index - Assessing money laundering risks worldwide. https://index.baselgovernance.org/

(2) Basel AML Index 2024 | Basel Institute on Governance. https://baselgovernance.org/publications/basel-aml-index-2024