Major Money Laundering Countries

The area displays notable diversity among countries, with considerable differences in the quality of their AML/CFT frameworks despite a seemingly low average risk score. Challenges are evident in the efficacy of AML/CFT supervision, preventive measures, and the transparency of beneficial ownership systems across several nations. Moreover, there is a notable range in the prevalence of corruption and bribery, experiencing an uptick from 2.91 in 2022 to 3.15 in 2023.

2. Eastern Europe and Central Asia

In 2023, there was a marginal improvement in the average scores related to the quality of AML/CFT frameworks. Nevertheless, risks surged in various other areas, encompassing corruption and bribery, public and financial transparency, as well as political and legal risks. The repercussions of these developments are more pronounced for the citizens of the region than for global financial security, as, with the exception of Türkiye, the region lacks substantial or international financial centers.

• The overall risk score is 5.16
• The quality of the AML / CFT framework is 4.99
• Bribery and corruption 6.08
• Financial transparency and standards 5.13
• Public transparency and accountability 4.05
• Legal and political risk 5.82

It is not reflected in the indicators used by the Basel AML Index and, therefore, did not affect Russia's overall risk score. 

3. East Asia and Pacific

Significant disparities in risk levels are evident across various aspects, including corruption and bribery, human trafficking, environmental crime, public and financial transparency, as well as the political and legal system within this region. Approximately one-third of the jurisdictions are identified as high-risk. Similar to the situation in Latin America, the profits derived from drug trafficking raise particular apprehension, with 40 percent of countries being identified by the US International Narcotics Control Strategy Report as significant money laundering jurisdictions in this context. The effectiveness of AML/CFT measures aimed at preventing the proliferation of weapons of mass destruction is generally subpar, as are the measures pertaining to prevention and transparency in beneficial ownership.

• The overall risk score is 5.47
• The quality of the AML / CFT framework is 5.95
• Bribery and corruption 4.55
• Financial transparency and standards 5.13
• Public transparency and accountability 4.44
• Legal and political risk 3.90

4. Latin America and the Caribbean

The majority of nations in Latin America exhibit moderate risks of money laundering and terrorist financing, with Haiti, Venezuela, and Suriname notably contributing to a decline in the regional average. A predominant source of money laundering risk continues to be drug trafficking, with only three countries—Chile, Grenada, and Uruguay—escaping inclusion in the US list of "major money laundering jurisdictions" in this context. While the quality of AML/CFT frameworks has remained consistent this year, there has been an increase in risks associated with corruption and bribery.

• The overall risk score is 5.40
• The quality of the AML / CFT framework is 5.52
• Bribery and corruption 5.42
• Financial transparency and standards 5.77
• Public transparency and accountability 4.66
• Legal and political risk 4.63

90% of the assessed territories are listed as “money laundering jurisdictions” by the US. There are significant differences across the region, indicating different institutional capacities to mitigate risks.

5. The Middle East and North Africa

The risk score for this region deteriorated in the current year. Although there was a marginal enhancement in the field of AML/CFT frameworks, which represented the region's weakest aspect last year, environmental crime risks within this domain continue to be assessed as low or medium. On the contrary, various other indicators, such as corruption and bribery, public and financial transparency, as well as political and legal risks, all experienced a decline.

• The overall risk score is 5.16
• The quality of the AML / CFT framework is 4.99
• Bribery and corruption 6.08
• Financial transparency and standards 5.13
• Public transparency and accountability 4.05
• Legal and political risk 5.82

6. North America

There have been no substantial changes in the situation for either the United States or Canada. The risks within the AML/CFT framework persist at a level twice as high as other measured risk areas according to the Basel AML Index. Weaknesses persist in the transparency of beneficial ownership information for both countries, with the impact of new legislation expected to manifest over time contingent on the effectiveness of the implementation of beneficial ownership information systems. Another persisting concern is the efficacy of preventive measures applied to financial institutions and designated non-financial businesses and professions, often referred to as potential "enablers."

• The overall risk score is 4.29
• The quality of the AML / CFT framework is 5.24
• Bribery and corruption 2.32
• Financial transparency and standards 2.72
• Public transparency and accountability 2.52
• Legal and political risk 2.50

7. South Asia

The overall performance in the Basel AML Index has shown improvement throughout South Asia this year. However, a significant portion of this positive trend is attributed to Sri Lanka and Pakistan graduating from the FATF grey list. The methodological changes implemented this year contributed to enhancements in the region's average score concerning the quality of AML/CFT frameworks, which was identified as the weakest area in the previous year. Additionally, there were positive improvements in indicators related to financial transparency.

• The overall risk score is 5.64
• The quality of the AML / CFT framework is 5.73
• Bribery Corruption 5.85
• Financial transparency and standards 5.73
• Public transparency and accountability 4.61
• Legal and Political Risk 5.25

8. Sub-Saharan Africa

New FATF evaluations for 10 countries led to a huge increase in country coverage this year. Despite this, average ML/TF risks remain higher than the global average. Nearly two-thirds of jurisdictions in this region fall into the high-risk category. Nearly a third of jurisdictions in the region score the lowest possible level for the effectiveness of AML/CFT measures. Of particular concern, given the region’s security issues, is weak performance when it comes to the effectiveness of measures to prevent the proliferation of weapons of mass destruction and the misuse of non-profit organizations for terrorist financing. 

• The overall risk score is 6.54
• The quality of the AML / CFT framework is 6.88
• Bribery and corruption 6.36
• Financial transparency and standards 6.30
• Public transparency and accountability 5.31
• Legal and political risk 5.34

What Can Be Done to Improve Supervision Generally?

To improve supervision generally and enhance the effectiveness of regulatory implementation, several key actions can be undertaken. Strengthening regulatory frameworks is crucial by aligning them with international standards, such as those established by FATF, through regular updates and refinements to address emerging risks and stay ahead of evolving money laundering and terrorist financing techniques.

Governments should invest in building the capacity of regulatory and supervisory bodies responsible for overseeing anti-money laundering and counter-terrorism financing measures. Adequate resources, training programs, and expertise must be provided to ensure the effective implementation of supervisory functions.

Adopting a risk-based approach to supervision can optimize resource allocation and prioritize higher-risk areas and entities. This targeted focus allows for a more efficient and effective supervision process.

Collaboration and information sharing among domestic and international stakeholders play a crucial role in improving supervision. Strengthening cooperation between regulatory bodies, financial institutions, law enforcement agencies, and international organizations facilitates the exchange of information, intelligence, and best practices, leading to more robust and coordinated supervision efforts.

Regular monitoring and evaluation of supervision's effectiveness is vital. Conducting comprehensive assessments, audits, and evaluations of regulatory and supervisory practices can identify gaps, weaknesses, and areas for improvement. Feedback from these evaluations should inform the development of strategies to enhance supervision.

Engagement with the private sector, including financial institutions, is essential. Establishing effective channels of communication and collaboration allows for regular dialogue, sharing of insights and experiences, and seeking input from industry professionals. This collaboration can contribute to the development of practical and effective supervisory approaches.

Moreover, leveraging technological advancements, such as the Sanction Scanner, can significantly enhance the efficiency and effectiveness of supervision. Sanction Scanner offers a comprehensive platform equipped with powerful tools for financial crime prevention and compliance. Its cutting-edge technology enables financial institutions and regulatory bodies to effectively monitor high-risk transactions, conduct thorough due diligence, and stay updated on the ever-evolving regulatory landscape.

By incorporating Sanction Scanner's robust features, including real-time screening against global sanctions lists, politically exposed persons (PEPs) databases, and adverse media sources, supervisory authorities can strengthen their capabilities in identifying and mitigating potential risks associated with money laundering and terrorist financing.

Sanction Scanner's advanced analytics and artificial intelligence-driven algorithms provide enhanced detection capabilities, allowing for the identification of patterns, anomalies, and suspicious activities that may warrant further investigation. This technology empowers supervisory bodies to proactively address financial crime, contributing to more efficient and impactful supervision efforts.

Furthermore, Sanction Scanner's user-friendly interface and comprehensive reporting capabilities facilitate the efficient management of compliance processes. It streamlines the documentation and record-keeping requirements, ensuring that regulatory obligations are met consistently and accurately.

By embracing the advanced features and functionalities offered by Sanction Scanner, regulatory bodies can strengthen their supervisory practices, improve compliance with AML/CFT standards, and enhance their ability to detect and deter illicit financial activities.