13/09/21

GLOBAL REGULATION: Corruption trackers flag increased global money laundering risks.

As published on swissinfo.ch, Monday 13 September, 2021.

The Basel Institute on Governance said the global risk score increased from 5.22 to 5.3 out of 10 (highest risk score) in its Anti-Money Laundering Index.

In 2021, Switzerland scored 4.89 in the independent annual ranking that examines the risk of money laundering in 110 jurisdictions. That marks an increase relative to 2020 when it scored 4.74. It now ranks 43rd

Even countries that made progress, the report observed, only made minimal, marginal gains.

The 10th edition of the Basel AML Index report stresses that a stronger response is needed to the threats arising from virtual assets (cryptocurrencies) and greater emphasis on prevention of money laundering and terrorism finance (not just enforcement).

“The use of virtual assets such as cryptocurrencies is exploding – for legitimate as well as illicit purposes,” notes the report.

The snapshot on global efforts to tackle money laundering and terrorism finance finds “ineffective systems are the general rule” and countries consistently do worse on prevention than enforcement.

The risk score is based on public data collated from 17 public sources including the Financial Action Task Force, Transparency International, the World Bank and the World Economic Forum.

It assesses country-specific legal frameworks on money laundering and terrorism financing, bribery and corruption risks, financial transparency, opportunities for public accountability, as well as legal and political risk factors.

The report highlights ineffective implementation of beneficial ownership transparency registers around the world. This refers to the public disclosure of the ultimate owners of an entity – i.e. an individual or individuals who controls a web of companies, foundations trusts and other entities.

Other areas of concern include the weak application of preventive measures outside the financial sector (for example, business sectors such as real estate) and the role of intermediaries, including lawyers and accountants, who can be exploited by criminal actors.