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Causal Capital ~ The Knowledge Capital Specialists

Basel AML Report 2016

The free Basel AML Index report for 2016 was published [LINK] a couple of days ago and it seems on the surface that this year's scores appear to be inline with last years numbers, overall that is.

Each country's index score is calculated from 14 indicators dealing directly with AML/CFT regulations, corruption, financial standards and the political disclosure of the country.

When countries are presented in a ledger award system such as the Basel AML report, it is tempting to compare different jurisdictional scores and ponder why. The Basel AML Index warns us not to do this or does it ...

"The Basel AML index ranks countries based on the overall score and provides data that is useful for comparative purposes. However, it should be stressed that the primary objective is not to rank countries in comparison to each other."

All this aside, detailing on the sources of information used to derive underlying scores are published within the index site and for those corporations willing to shell out CHF 2000, a more explanatory expert edition of the publication is available.

Basel AML Index report for 2016 [LINK]

All benchmarks need to always be reviewed with caution, especially when they are assessment based and even more so when they are applied to assets (countries or societies) that are vastly different in nature. The same caveat needs to be kept in mind when one peruses the Basel AML Index.

For example: Placing Australia marginally below Albania in the Basel AML ranking list seems immaterial but if one was to consider the corruption index published for both these countries; Australia sits around 13 on the global log while Albania cranks in at a wonderful 88 [LINK].

What do we make of this Basel AML report?

It's interesting, may be ... It says to me that there may be a deviation on money laundering compliance and money laundering activity. It is even possible that those countries with the highest compliance rankings may not have the most 'effective' control, if that makes any sense; perhaps as much logic as what can be found in the Basel AML report.

Anyway if you are a compliance officer from a bank in Belgium or Italy, you can enjoy some humbled solace in this illogical madness when you read the following statement from the report:

"Belgium and Italy for example, despite improving their legal frameworks, received due to the evaluation of its effectiveness, a worse overall assessment score compared to their previous assessments."

Given the regulatory severity that is now bestowed upon those institutions found to be non-compliant with Anti-Money Laundering requirements; compliance officers need to consider ways in which they can coherently assess their own compliance or control effectiveness. In the coming weeks ahead, we are going to publish how this can be achieved.


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