Major Money Laundering Countries

Blog / Major Money Laundering Countries

Money laundering remains a pervasive issue that undermines global financial systems and fuels illicit activities. With an estimated $2 trillion laundered globally each year, the impact on economies and security is profound. Identifying major money laundering countries is crucial for understanding where these illicit flows are concentrated and how they disrupt economic stability.

Certain nations, due to their financial environments, regulatory gaps, or geopolitical situations, have become significant hotspots for money laundering. These countries not only pose substantial risks to the integrity of international finance but also challenge global efforts to enforce anti-money laundering (AML) regulations effectively.

How Major Money Laundering Countries Are Identified?

Identifying major money laundering countries involves evaluating several critical factors:

  • Countries with weak or insufficient AML regulations are more prone to money laundering activities.
  • Nations with high levels of banking secrecy and poor financial disclosure practices are at greater risk.
  • High levels of corruption and bribery can undermine AML efforts and increase the risk of money laundering.
  • Economic instability and political uncertainty often lead to higher money laundering risks as financial systems become more vulnerable.

The Basel AML Index and the Financial Action Task Force (FATF) are pivotal in assessing and mitigating money laundering risks. The Basel AML Index provides a comprehensive evaluation of countries' risk levels based on multiple criteria, while the FATF sets international standards and promotes effective implementation of AML measures globally. Understanding their methodologies and criteria is essential for grasping how major money laundering risks are identified and managed.

What is The BSA AML Index?

In recent years, money laundering has been rapidly growing. So the amount of dirty money. Governments and financial institutions try to protect themselves from this crime.

Basel Institute of Governance is an independent, international, non-profit organization committed to preventing Corruptionuption and other financial crimes. The organization was established in Basel, Switzerland.

Each year, Basel prepares an independent score and ranking that assesses the world's risk of money laundering and terrorist financing. This ranking is the Basel AML Index. Published by the Basel Institute of Governance in 2012, this document gives risk scores based on data from 15 publicly available sources, such as the Financial Action Task Force (FATF), the World Bank, and the World Economic Forum. FATF country's risk scores cover five areas:

  • Quality of AML / CFT framework
  • Bribery and Corruption
  • Financial transparency and standards
  • Public transparency and accountability
  • Legal and Political Risks

The primary objective is not to rank countries superficially compared to each other but to give an overall view of different countries 'and regions' risk levels and their progress in addressing vulnerabilities over time. 

Scores and Ranking

The Top 10 Countries With the Lowest Money Laundering Risk

JURISDICTION
OVERALL SCORE
Iceland
2.87
Finland
2.96
Estonia
3.00
Andorra
3.09
Sweden
3.20
Denmark
3.36
New Zealand
3.38
Norway
3.45
Lithuania
3.47
San Marino
3.51


The Top 10 Countries With The Highest Money Laundering Risk

JURISDICTION
OVERALL SCORE
Haiti
8.25
Chad
8.14
Myanmar
8.13
The Democratic Republic Of The Congo
8.10
Republic Of Congo
7.91
Mozambique
7.88
Gabon
7.73
Guinea-Bissau
7.69
Venezuela
7.63
Laos
7.44


Regional Focus on the Money Laundering Situations in Countries

The Basel AML Index follows the World Bank classification of countries, with an additional separation of Europe and Central Asia into two regions:

Anti-Money Laundering Requirements of your country!

1. European Union and Western Europe

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.

  • The overall risk score is 3.96
  • The quality of the AML/CFT framework is 4.45
  • Bribery and corruption 3.15
  • Financial transparency and standards 3.67
  • Public transparency and accountability 2.20
  • Legal and political risk 2.73

  • JURISDICTION
    OVERALL SCORE
    Iceland
    2.87
    Finland
    2.96
    Estonia
    3.00
    Andorra
    3.09
    Sweden
    3.20
    Denmark
    3.36
    Norway
    3.45
    Lithuania
    3.47
    San Marino
    3.51
    Slovenia
    3.57
    France
    3.58
    United Kingdom
    3.66
    Luxembourg
    3.67
    Greece
    3.70
    Czech Republic
    3.82
    Spain
    3.96
    Latvia
    4.00
    Ireland
    4.01
    Switzerland
    4.05
    Portugal
    4.08
    Austria
    4.10
    Belgium
    4.13
    Netherlands
    4.15
    Slovakia
    4.22
    Germany
    4.29
    Poland
    4.46
    Italy
    4.56
    Liechtenstein
    4.58
    Malta
    4.65
    Croatia
    4.66
    Cyprus
    4.67
    Romania
    4.90
    Hungary
    4.94
    Bulgaria
    5.16

    AML in germany, netherlands, france, spain


    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
    JURISDICTION
    OVERALL SCORE
    Macedonia North
    4.26
    Moldova
    4.59
    Georgia
    4.69
    Kazakhstan
    4.71
    Armenia
    4.72
    Serbia
    4.74
    Albania
    4.75
    Ukraine
    5.08
    Uzbekistan
    5.12
    Belarus
    5.33
    Türkiye

    5.53

    Tajikistan

    5.91

    Kyrgyzstan

    6.00

    Turkmenistan

    6.80

    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

    JURISDICTION
    OVERALL SCORE
    New Zealand 
    3.38
    Australia 
    3.69
    Taiwan
    4.00
    Singapore
    4.30
    Brunei Darussalam
    4.38
    South Korea
    4.56
    Japan
    4.66
    Fiji
    4.70
    Hong Kong SAR, China
    4.93
    Samoa
    4.95
    Mongolia
    5.00
    Indonesia
    5.01
    Malaysia
    5.21
    Vanuatu
    5.45
    Philippines
    5.64
    Palau
    5.68
    Thailand
    5.82
    Macao SAR, China
    6.05
    Tonga 
    6.43
    China 
    6.77
    Cambodia
    6.78
    Solomon Islands
    6.86
    Vietnam
    6.96
    Laos
    7.44
    Myanmar
    8.13
     

    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

    JURISDICTION
    OVERALL SCORE
    Uruguay
    4.08
    Chile
    4.13
    Dominica
    4.46
    Trinidad and Tobago
    4.51
    Costa Rica
    4.72
    Colombia
    4.74
    Aruba
    4.74
    Peru
    4.81
    Antigua and Barbuda
    4.91
    Grenada
    4.97
    Ecuador
    5.06
    Paraguay
    5.07
    Mexico
    5.21
    Dominican Republic
    5.21
    Saint Lucia 
    5.25
    Jamaica
    5.29
    Barbados
    5.32
    Guatemala
    5.38
    Bahamas
    5.49
    Honduras
    5.60
    Cuba
    5.64
    Panama
    5.76
    Saint Kitts and Nevis
    6.11
    Nicaragua
    6.42
    Suriname
    7.06
    Venezuela
    7.63
    Haiti
    8.25
     

    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

    JURISDICTION
    OVERALL SCORE
    Israel 
    3.67
    Tunisia 
    4.59
    Morocco 
    4.69
    Bahrain
    4.82
    Jordan
    4.90
    Egypt
    5.06
    Qatar
    5.19
    Saudi Arabia
    5.38
    United Arab Emirates
    5.74
    Algeria
    7.22

    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

    JURISDICTION
    OVERALL SCORE
    Canada 
    4.28
    United States
    4.30

    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

    JURISDICTION
    OVERALL SCORE
    Sri Lanka
    5.42
    Pakistan
     5.44
    Bangladesh
     5.80
    Bhutan 5.89
     

    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

    JURISDICTION
    OVERALL SCORE
    Botswana
    4.53
    Mauritius 
    4.74
    Namibia
    5.09
    Seychelles
    5.23
    Ghana
    5.29
    Zimbabwe
     5.52
    Ethiopia
    5.54
    Malawi
    5.63
    Gambia
    5.66
    Zambia
    5.70
    South Africa
    5.85
    Cape Verde
    6.05
    Tanzania
    6.27
    Burkina Faso
    6.48
    Mauritania
    6.62
    Benin
    6.62
    Niger
    6.64
    Senegal
    6.67
    Nigeria
    6.72
    Cameroon
    6.75
    Uganda
    6.83
    Côte d'Ivoire
    6.87
    Togo
    6.95
    Kenya
    6.95
    Eswatini
    6.97
    Angola
    7.03
    Mali
    7.06
    Sierra Leone
    7.09
    Liberia
    7.17
    Madagascar
    7.43
    Guinea-Bissau
    7.69
    Gabon
    7.73
    Mozambique
    7.88
    Republic of the Congo
    7.91
    Democratic Republic of the Congo
    8.10
    Chad
    8.14


    What Can Be Done to Improve Supervision Generally?

    To enhance regulatory supervision and the effectiveness of implementation, several strategic actions should be undertaken:

    1. Strengthen Regulatory Frameworks

    • Align with International Standards: Regularly update and refine regulations to align with international standards, such as those set by the Financial Action Task Force (FATF).
    • Address Emerging Risks: Adapt regulations to address new risks and evolving money laundering and terrorist financing techniques.

    2. Build Capacity of Regulatory Bodies

    • Invest in Resources: Allocate sufficient resources to regulatory and supervisory bodies.
    • Enhance Training: Provide training programs and expertise to ensure effective supervision and implementation of AML and counter-terrorism financing measures.

    3. Adopt a Risk-Based Approach

    • Optimize Resource Allocation: Focus resources on higher-risk areas and entities.
    • Prioritize High-Risk Targets: Use a targeted approach to make supervision more efficient and effective.

    4. Foster Collaboration and Information Sharing

    • Strengthen Cooperation: Improve collaboration between regulatory bodies, financial institutions, law enforcement agencies, and international organizations.
    • Facilitate Information Exchange: Share intelligence and best practices to enhance coordinated supervision efforts.

    5. Regularly Monitor and Evaluate Supervision

    • Conduct Comprehensive Assessments: Perform regular audits and evaluations of regulatory practices.
    • Identify and Address Gaps: Use feedback to address weaknesses and improve supervisory strategies.

    6. Engage with the Private Sector

    • Establish Communication Channels: Create an effective dialogue with financial institutions and industry professionals.
    • Share Insights and Experiences: Collaborate to develop practical and effective supervisory approaches.

    7. Leverage Technological Advancements

    • Utilize Sanction Scanner: Employ advanced tools like Sanction Scanner to enhance supervision efficiency.
    • Real-Time Screening: Access global sanctions lists, PEP databases, and adverse media sources for real-time monitoring.
    • Advanced Analytics: Utilize AI-driven algorithms to detect patterns, anomalies, and suspicious activities.
    • User-Friendly Interface: Streamline compliance processes with a user-friendly platform that simplifies documentation and reporting.

    By implementing these strategies and integrating advanced technologies such as the Sanction Scanner, regulatory bodies can significantly improve their supervisory practices. This approach enhances compliance with AML/CFT standards and strengthens the ability to detect and prevent illicit financial activities.

    Try sanction scanner aml solutions

    You Might Also Like