The Basel Institute on Governance recently released its 9^th edition of the Basel Anti-Money Laundering (AML) report covering the year 2020, in which it provided risk ratings for 141 countries largely based on the quality of each country’s framework for AML and countering the financing of terrorism (AML/CFT), among several other related factors. In details, the index is based on 16 unequally-weighted indicators that can be classified under five major aspects namely, quality of AML/CFT framework (total assigned weight: 65%), corruption risk (10%), financial transparency and standards (10%), public transparency and accountability (5%), and political and legal risk (10%). The overall scores of covered countries range between 0 (least risky countries) and 10 (most risky countries). The report stated that this year’s global money laundering risks remain high, as evidenced by the average Basel AML Index score of 5.22 in 2020, in comparison with 5.39 in 2019. In this vein, the report mentioned that a small number of countries made significant progress in addressing the aforementioned risks, with six countries improving their risk scores by more than one point. In parallel, the report noted that thirty five countries witnessed a drop in their scores. The report added that countries scored poorly in terms of the quality of AML/CFT supervision. In details, the report revealed that supervision by competent authorities of financial institutions, designated non-financial businesses and professions (DNFBPs) and virtual asset service providers (VASPs) is a primary factor affecting AML/CFT risk and resilience. The report highlighted that the analysis is based on Financial Action Task Force (FATF) data from 100 countries with the fourth-round evaluation methodology covering both the technical compliance and effectiveness of countries. Accordingly, the report showed that supervision is at the intersection between regulation and implementation of AML/CFT standards and their enforcement, with data from the FATF showing that countries with low technical compliance scores are having problems with the effectiveness of said measures. In terms of technical compliance, the Basel report unveiled that the average score for standards of regulation & supervision of financial institutions is low at 57%, while that of DNFBPs is lower at 42%. Similarly, the average effectiveness of the aforementioned measures and their implementation is even lower at 26%, with 32 countries scoring zero and no countries getting full scores, always according to Basel.

In terms of overall rankings in the Basel 2020 AML Index by region, only two regions managed to outperform the global average risk score of 5.22. In details, the European Union and Western Europe region came in as the best performer with an overall risk score of 4.01, followed by North America (overall risk score of 4.72), Europe and Central Asia (overall score of 5.25), only to name a few. Furthermore, the MENA region scored 5.51 in the index, coming in the sixth position in the index.

In terms of overall rankings in the Basel 2020 AML Index, Afghanistan emerged as the riskiest country globally with a score of 8.16, followed by Haiti (8.15), Myanmar (7.86), Laos (7.82), and Mozambique (7.81). Regionally, Yemen topped the list of Arab countries in the Basel 2020 AML Index with a score of 7.12 and an international rank of 10, followed by Algeria (score: 6.74; international rank: 19), and Jordan (score: 5.96; international rank: 35). In addition, Lebanon came as the third best regional performer in this year’s index with a score of 5.33 and a global rank of 61, improving from last year’s results where it scored 5.46 and occupied the 55^th international place. On the other hand, Bahrain (score: 4.41; international rank: 108) and Egypt (score: 4.96; international rank: 82) held the first and second positions in the region in the Basel 2020 Anti-Money Laundering report, with Saudi Arabia sharing the third position with Lebanon in the region.