The Basel AML Index is a composite country risk ranking developed by the Basel Institute on Governance and its expert team from the International Centre for Asset Recovery (ICAR). The purpose of the Basel AML Index is to analyze countries risk regarding money laundering / terrorism financing, and other related factors such as corruption and political risk.

The Basel AML Index uses a composite methodology, aggregating 15 variables from third party sources that deal with anti-money laundering (AML) / counter terrorist financing (CTF) regulations, financial standards, transparency & disclosure, and political risks.

http://index.baselgovernance.org/Index.html#introduction

The resulting overall score is based on a weighting scheme through a qualitative expert assessment. In short the Basel AML Index is:

•an overview of over 140 countries according to their risk level in money laundering / terrorist financing;
•a composite index based on public sources and third party assessments;
•an innovative research-based risk ranking to be updated annually

In addition, the Basel Institute offers an Expert Edition, which contains additional, more detailed features for an in-house risk assessment for financial institutions and other stakeholders. In particular, the Expert Edition provides for complete customization. Specific sub-indicators may be selected to produce a tailored analysis. For instance, compliance and due-diligence experts can select any variables relevant for their own specific risk assessment. See for more details here: Brochure Expert Edition

If you are interested in purchasing the Expert Edition or obtaining a demo account for the Expert Edition please contact:index@baselgovernance.org
 
Who is it for?

The Basel AML Index is targeted at any audience that is interested in AML/CTF and its related risk factors including:

•Financial institutions (banks, compliance experts);
•Policy makers;
•AML/CTF Regulators
•Financial Intelligence Units (FIUs); and
•Academics and Researchers.

Please refer to the Expert Edition for professional use: Brochure Expert Edition 

What does the Basel AML Index measure?

The Basel AML Index is based on external public sources including indices from the World Bank, the World Economic Forum and Financial Action Task Force (FATF). A core component and focus of the Basel AML Index is the use of the FATF Mutual Evaluation Reports whose recommendations are weighted to reflect countries compliance and implementation of AML/CTF regulations. Additionally, related aspects such as banking secrecy, corruption, financial regulations, judicial strengths and civil rights are factored in as well.

The Basel Institute on Governance does not generate its own data but relies on data from trusted third party sources employing aggregation techniques to generate own results or scores from those component sources. As a result the Basel AML Index does not measure the actual existence of money laundering activity in a country; instead it provides a basis for assessing a risk level, meaning the likelihood of money laundering activities originating from a given country based on its adherence to AML/CTF standards and other risk categories. It is indeed important to note that money laundering and terrorist financing cannot be quantitatively measured since most of it occurs, due to its illegal nature, in absolute secrecy. Countries with missing or insufficient data have been excluded in this ranking, which is why some key countries that are considered as known money laundering / tax haven jurisdictions are not covered. The Expert Edition includes additional countries (e.g. Afghanistan) based on the available data to suggest a risk score.

More information on the methodology underlying the Basel AML Index can be found in the methodology section.
 
 Why create an AML Index and what are its benefits?

Most publicly available country risk assessments and governance rankings do not focus on money laundering / terrorist financing risks. Some efforts have been made to address tax haven or offshore jurisdictions. However, there is still a lack of a particular focus on AML/CTF risk assessments and their indicators. Moreover, creating an AML/CTF county risk assessment is challenging because there are no accepted best practices for identifying and rating countries according to their money laundering/terrorist financing risks.

In addition, international standard setters emphasize the importance of country risk assessment in the area of AML/CTF. The Financial Action Task Force (FATF) recommends for example that advanced Anti-Money Laundering (AML) systems should be following the principles of a Risk Based Approach (RBA). The RBA guidance documents of both the Wolfsberg Group (March 2006) and FATF (June 2007) state that country or geographic risk is one of the most commonly used risk criteria for an effective RBA to counter money laundering and terrorism financing, because money launderers tend to seek out countries in which there is a low risk of detection due to weak or ineffective anti-money laundering regulations.

To address this need the Basel AML Index created a country risk assessment focusing on AML/CTF. An independent and academic approach for conducting a risk assessment in money laundering/terrorist financing is new. Employing this novel approach, the Basel AML Index attempts to fill this gap and provide a research-based AML country risk ranking to capture the complex global nature of money laundering/terrorist financing risks.

At the same time, the Basel AML Index offers with its Expert Edition a practical solution to financial institutions in their compliance area that are in need for a standardized and independent risk assessment. See for more details here: Brochure Expert Edition
 
http://index.baselgovernance.org/Index.html#introduction