[{"data":1,"prerenderedAt":275},["ShallowReactive",2],{"news-we-mourn-the-death-of-dr-jan-christoph-richter-356":3,"news-we-mourn-the-death-of-dr-jan-christoph-richter-356-similar":41,"i-heroicons:arrow-left-20-solid":270},[4],{"id":5,"status":6,"date_created":7,"date_updated":8,"title":9,"type":10,"body":11,"date":12,"topic":13,"slug":15,"activity":16,"nid":17,"topics":18,"activities":19,"programme":20,"area":20,"websites":21,"language":20,"image":23,"translation_of":20,"countries":35,"tags":36,"authors":37,"images":38,"translations":39,"content":40},10259,"published","2022-05-26T22:59:37.000Z","2025-08-31T23:14:59.000Z","We mourn the death of Dr. Jan Christoph Richter","News","In memory of Jan Cristoph Richter, 13.9.1975 - 31.1.2012\n\nWe mourn the death of\n\n> Dr. Jan Christoph Richter, 13.9.1975 - 31.1.2012 whose sudden passing has shocked us deeply. His active and dedicated engagement for a more just and fair world was inspiring. We will remember him as a committed, enthusiastic and inspirational colleague and friend. We will duly honor his memory. _Basel Institute on Governance, Members of the Board and Team_\n\nWir trauern um\n\n> Dr. Jan Christoph Richter, 13.9.1975 – 31.1.2012  dessen Tod uns zutiefst erschüttert hat. Sein tatkräftiger Einsatz für eine gerechtere Welt war inspirierend. Wir behalten ihn in Erinnerung als engagierten, begeisterungsfähigen und begeisternden Kollegen und Freund und werden ihm ein gebührendes Andenken bewahren. _Basel Institute on Governance, Stiftungsrat und Team_","2012-01-10",[14],"","we-mourn-the-death-of-dr-jan-christoph-richter-356",[14],356,[],[],null,[22],"Main page",{"id":24,"storage":25,"filename_disk":26,"filename_download":27,"title":9,"type":28,"created_on":29,"modified_on":30,"charset":20,"filesize":31,"width":32,"height":33,"duration":20,"embed":20,"description":20,"location":20,"tags":20,"metadata":34,"focal_point_x":20,"focal_point_y":20,"tus_id":20,"tus_data":20,"uploaded_on":30},"d0f7f0dc-0e81-4180-9354-00bde9505254","local","d0f7f0dc-0e81-4180-9354-00bde9505254.webp","jan-richter.webp","image\u002Fwebp","2025-05-12T21:26:22.000Z","2026-05-06T07:34:52.000Z",16530,398,500,{},[],[],[],[],[],[],[42,70,100,121,148,176,196,220,244],{"id":43,"body":44,"status":6,"type":45,"date":46,"slug":47,"title":48,"image":49,"countries":50,"topic":51,"activity":53,"tags":55,"nid":56,"topics":57,"activities":58,"authors":59,"images":61,"websites":62,"area":20,"programme":20,"language":20,"translations":63,"translation_of":20,"user_created":64,"date_created":65,"user_updated":66,"date_updated":67,"content":68,"link":69},9732,"The 9th public edition of the [Basel AML Index](https:\u002F\u002Fwww.baselgovernance.org\u002Fbasel-aml-index), an independent ranking of countries’ risk of money laundering and terrorist financing, will feature several changes to its underlying indicators and methodology. The new edition of the Basel AML Index is due to be released in early July.\n\nThe changes have been agreed by a group of external expert reviewers in the fields of AML, compliance and risk assessment. The group meets annually to review the Basel AML Index methodology in light of data availability and trends in global AML regulation and practice.\n\nThe new indicators and weighting adjustments reflect important evolutions in the sphere of anti-money laundering and counter terrorist financing (AML\u002FCFT).\n\n### WEF data on judicial independence\n\nThe next edition of the Basel AML Index will include data from the Judicial Independence ranking of the [World Economic Forum (WEF) Global Competitiveness Index](https:\u002F\u002Fwww.weforum.org\u002Freports\u002Fglobal-competitiveness-report-2019) as an indicator of Legal and Political Risks. The Judicial Independence data, which is published annually and covers around 70 percent of jurisdictions globally, will have a weighting of 5 percent of the total AML risk score.\n\nIndependence of the judiciary is key to the successful fight against financial crime. A politically dependent judiciary may lead to politically motivated prosecutions and\u002For give misleading information about the number of convictions for money laundering and terrorist financing (ML\u002FTF).\n\nA recent analysis of data from the Financial Action Task Force (FATF), prepared for Basel AML Index Expert Edition Plus subscribers, shows that countries with tight state control over the judiciary often score highly for the effectiveness of their AML\u002FCFT measures. A good example is Russia, discussed in this article on [Russia’s money laundering risks – what does the latest FATF report mean in practice?](https:\u002F\u002Fwww.baselgovernance.org\u002Fblog\u002Frussias-money-laundering-risks-what-does-latest-fatf-report-mean-practice)\n\nFrom an AML perspective, close judicial control appears to be a positive element. On the other hand, it could also be a sign of limited political freedom.\n\n### TIP Report data on human trafficking\n\nThe second new indicator in the next edition of the Basel AML Index is the [Trafficking in Persons (TIP) Report](https:\u002F\u002Fwww.state.gov\u002Ftrafficking-in-persons-report\u002F) of the US Department of State, which ranks around 160 governments according to their perceived efforts to acknowledge and combat human trafficking. This data will be included in the category of Quality of AML\u002FCFT Framework with a 5 percent weighting.\n\nHuman trafficking is said to be the third largest source of income for organised crime groups after drug and arms trafficking, generating an [estimated USD 150 billion in profits](https:\u002F\u002Fwww.osce.org\u002Fsecretariat\u002F438323?download=true) each year. A [2018 FATF report](http:\u002F\u002Fwww.fatf-gafi.org\u002Fpublications\u002Fmethodsandtrends\u002Fdocuments\u002Fhuman-trafficking.html) refers to human trafficking as one of the fastest growing and most profitable forms of international crime affecting nearly every country in the world.\n\nAlthough issues of human trafficking are already partially covered in the Basel AML Index by FATF country assessments, the decision to include a specific indicator for human trafficking reflects its fast-growing importance as a predicate offence for money laundering.\n\nThe TIP Report relies on perception-based data and the results are sometimes challenged by countries. The ranking also reflects perceived government action to combat the crime rather than the size of the country’s problem. This demonstrates the need for more global data on human trafficking, not just to support efforts to combat the crime but also the related money laundering.\n\n### Exclusion of data on regulation of securities exchanges\n\nThe WEF Global Competitiveness Index stopped providing data on the regulation of securities exchanges in 2018. Until now, this data has contributed just over 5 percent of the total Basel AML Index score in the category Financial Transparency and Standards.\n\nSince there is no adequate alternative data source, this indicator will be excluded from the next edition onwards. The category of Financial Transparency and Standards is still sufficiently covered by data from the WEF Global Competitiveness Index on “Strength of auditing and reporting standards”,         as well as the World Bank’s [Extent of Corporate Transparency Index](https:\u002F\u002Fdatacatalog.worldbank.org\u002Fprotecting-minority-investors-extent-corporate-transparency-index-0-7-db15-20-methodology-score) and [IDA Resource Allocation Index](https:\u002F\u002Fida.worldbank.org\u002Ffinancing\u002Fresource-management\u002Fida-resource-allocation-index).\n\n### Decrease in weight of US International Narcotics and Control Strategy Report\n\nThe US Department’s International Narcotics Control Strategy Report (US INCSR) is an annual publication that collates information about AML capabilities and vulnerabilities. Its Volume II contains a list of “major money laundering countries”, which previously accounted for 10 percent of the total Basel AML Index score.\n\nIn 2017, the INSCR narrowed its classification from three levels to only one. Some observers believe turns the report into a sanctioning instrument for the 81 listed countries, although the US INCSR itself rejects any claim that there are sanctioning motivations behind the list. Until now, the Basel AML Index has used a model to impute the missing data, but this is no longer an option due to the age of the model’s underlying data.\n\nDespite these issues, the INSCR data remains significant for financial institutions. It will therefore remain an indicator in the next edition of the Basel AML Index, but its weight will decrease from 10 percent to 5 percent.\n\n### Quick background to the Basel AML Index\n\nThe Basel AML Index is an independent annual ranking that assesses the risk of money laundering and terrorist financing (ML\u002FTF) around the world.\n\nPublished by the Basel Institute on Governance since 2012, it provides risk scores based on data from 15 publicly available sources such as the Financial Action Task Force (FATF), Transparency International, the World Bank and the World Economic Forum. The risk scores cover five domains:\n\n*   Quality of AML\u002FCFT Framework\n*   Bribery and Corruption\n*   Financial Transparency and Standards\n*   Public Transparency and Accountability\n*   Legal and Political Risks\n\nThe [Public Edition of the Basel AML Index 2019](https:\u002F\u002Fwww.baselgovernance.org\u002Fbasel-aml-index\u002Fpublic-ranking) covers 125 countries with sufficient data to calculate a reliable ML\u002FTF risk score.\n\nA comprehensive list of scores and sub-indicators for 203 countries is available in the [Expert Edition](https:\u002F\u002Fwww.baselgovernance.org\u002Fnode\u002F403). This is a subscription-based service used by companies and financial institutions as an ML\u002FTF country risk-rating tool for compliance and risk assessment purposes. Subscription is free for academic, public, supervisory and non-profit organisations. The Expert Edition Plus option includes a detailed analysis of FATF data.","Blog","2020-05-28","what-were-changing-in-the-basel-aml-index-and-why-1757","What we’re changing in the Basel AML Index – and why","https:\u002F\u002Fjam.baselgovernance.org\u002Fapi\u002Fassets\u002Fa766a29c-c78f-450c-b1c2-4b3f19dd0576?width=1000&height=650&format=webp&quality=80",[],[52],"Anti-Money Laundering",[54],"Basel AML Index",[],1757,[52],[54],[60],1229,[],[22,54],[],"03bebfd8-0b40-4a2a-820d-b9d9c13b9de6","2022-05-26T22:54:55.000Z","b0662e2a-864d-4888-a1b7-4342b7570b30","2025-08-31T23:14:40.000Z",[],"\u002Fresources\u002Fnews\u002Fwhat-were-changing-in-the-basel-aml-index-and-why-1757",{"id":71,"body":72,"status":6,"type":45,"date":73,"slug":74,"title":75,"image":76,"countries":77,"topic":78,"activity":79,"tags":81,"nid":89,"topics":90,"activities":91,"authors":92,"images":94,"websites":95,"area":20,"programme":20,"language":20,"translations":96,"translation_of":20,"user_created":64,"date_created":97,"user_updated":66,"date_updated":67,"content":98,"link":99},10528,"_This article is adapted from the [2024 Basel AML Index public report](https:\u002F\u002Fbaselgovernance.org\u002Fpublications\u002Fbasel-aml-index-2024)._ \n\n> Sound like someone you know?\n> \n> The 84-year-old who lost his life savings after receiving a panicked call from someone who sounded exactly like his granddaughter, saying she was in jail for drug possession and needed USD 10,000 for bail...\n> \n> The lonely widow seeking companionship online, who sent cash via a money transfer service to his long-distance love – who in actual fact was himself a victim of human trafficking, trapped in a \"scam centre\" on the other side of the world and defrauding hundreds simultaneously…\n> \n> The small business owner who suffered reputational and financial loss after his identity was stolen and used to establish shell companies and purchase goods as part of a money laundering scheme...\n> \n> The young professional, excited by the buzz around cryptocurrency, who invested USD 15,000 in an online crypto platform advertised on social media that promised guaranteed high returns – which vanished before she could withdraw them…\n> \n> The government that loses billions of dollars annually to healthcare fraud, money that should be spent on some of the most vulnerable in society.\n\nStories of fraud and scams like those in the box above make clear the human impact of financial crime. The financial impact is no less horrifying. The UK is estimated to lose over a [USD 1.5 billion annually to fraud](https:\u002F\u002Fwww.ukfinance.org.uk\u002Fsystem\u002Ffiles\u002F2024-05\u002FAnnual%20Fraud%20Report%202024_0.pdf), which makes up 40 percent of reported crime – despite significant under-reporting. Globally, individuals are estimated to lose over [USD 1 trillion to online scams](https:\u002F\u002Fwww.gasa.org\u002Fpost\u002Fglobal-state-of-scams-report-2024-1-trillion-stolen-in-12-months-gasa-feedzai) alone.\n\nWhatever the real figures, that’s a lot of money that needs to be laundered on international markets.\n\nFollowing our expert annual review meetings we decided to add indicators of fraud to the [Basel AML Index methodology](https:\u002F\u002Findex.baselgovernance.org\u002Fmethodology) this year. This decision reflects the growing significance of fraud as a predicate offence to money laundering and as a risk that regulated entities need to consider.\n\nThough definitions of fraud vary and data is both poor and inconsistent, the huge and rising [social and economic consequences of fraud](https:\u002F\u002Findex.baselgovernance.org\u002Fnews\u002Fbasel-aml-index-updates-methodology-to-reflect-rising-global-fraud-risks-2713) make it impossible to ignore in any money laundering risk assessment.\n\n> What is fraud?\n> \n> Given the lack of a globally accepted definition of fraud, we use the term loosely as an umbrella term for activities that involve deliberate deception of an individual or entity for the sake of obtaining a financial gain. At the transnational level, fraud schemes are often [orchestrated by organised criminal actors](https:\u002F\u002Fwww.unodc.org\u002Fdocuments\u002Forganized-crime\u002FPublications\u002FIssuePaperFraud-eBook.pdf) and facilitated by technology.\n\n### Fraud-related indicators in the Basel AML Index\n\nFraud-related data is sourced from the [Global Organized Crime Index](https:\u002F\u002Focindex.net\u002F) in two categories:\n\n*   “financial crimes” (covering financial fraud, tax evasion, embezzlement and misuse of funds); and\n*   “cyber-dependent crimes” (including malware, hacking, ransomware and cryptocurrency fraud).\n\nIt is not possible to disaggregate the data.\n\nBoth indicators join indicators of corruption and bribery in Domain 2 of the Basel AML Index methodology, with a weighting of 5 percent and 2.5 percent respectively. The weight of the domain (its impact on the overall Basel AML Index score) has increased from 10 percent to 17.5 percent.\n\n### What impact has the inclusion of these new indicators had?\n\nGlobally, the average risk score in Domain 2 on corruption and fraud has increased from 5.02 in 2023 to 5.12 this year following the addition of the fraud indicators. This increase may be influenced by this year’s larger country coverage, as well as by changes in performance in the existing indicators of corruption and bribery. A few highlights:\n\n*   Just under half of the countries covered – 44 percent – have a higher risk score in Domain 2. These include high-income countries and those with large financial centres. The top five from highest to lowest increase are: New Zealand (which nearly tripled its risk score), Switzerland, Norway, Denmark, Sweden. Most of these countries still have lower than average scores for corruption and bribery, but their relative wealth makes them targets for fraud, cybercrimes and the related financial crimes measured by the new indicators.\n*   Around 50 percent get a lower risk score in Domain 2 as a result of adding the two new indicators, though the impact is less drastic than for those with an increased risk score. The top five include, from biggest to smallest reduction, Antigua and Barbuda, Chad, Barbados, Central African Republic and Republic of the Congo.\n*   At the regional level, the European Union and Western Europe, North America and East Asia and Pacific saw an increase in risk scores in Domain 2 while Eastern Europe and Central Asia, Latin America and the Caribbean, South Asia and Sub-Saharan Africa saw a decrease overall. The impact on the Middle East and North Africa was negligible. This means the gap between regions is decreasing, at least in relation to performance in Domain 2.\n\nThe following map shows the regional scores in Domain 2 (“corruption and fraud risks”) after adding fraud data in 2024 (compared to 2023):\n\n### Challenges in fraud data and analysis\n\nThe reason we don’t provide more analysis of the impact of fraud data is that there are significant challenges and concerns around the quality of fraud data generally.\n\nFirst, there are no globally recognised or unified approaches to collecting data on fraud. Data is mostly collected (if at all) at the country level and according to different definitions and scopes, for example with a focus on [scams](https:\u002F\u002Fwww.gasa.org\u002Fresearch). Underreporting of fraud, perhaps due to feelings of shame or the desire among businesses to avoid reputational damage, is also a major issue.\n\nAs supported by an extensive [UNODC report on organised fraud](https:\u002F\u002Fwww.unodc.org\u002Fdocuments\u002Forganized-crime\u002FPublications\u002FIssuePaperFraud-eBook.pdf), a global standard and collaborative efforts to improve data collection, quality and sharing are urgently needed as the foundations of any coherent attempt to prevent and counter fraud.\n\nSecond, the cross-border nature of many forms of fraud and money laundering make it particularly challenging to assign risks to a particular jurisdiction.\n\nAn investment fraud scheme may be perpetrated in several financial centres, masterminded by a transnational organised crime group and carried out by individuals working in scam centres such as those [rapidly emerging in Southeast Asia](https:\u002F\u002Fwww.usip.org\u002Fpublications\u002F2024\u002F05\u002Ftransnational-crime-southeast-asia-growing-threat-global-peace-and-security). The proceeds may be laundered across multiple jurisdictions and through the crypto ecosystem before ending up in a bank account or real estate – perhaps even in the country in which it was stolen.\n\nGiven the above challenges, and until standards and data are improved, we would urge all users of the Basel AML Index to consult the detailed breakdown of indicators available in the [Expert Edition](http:\u002F\u002Findex.baselgovernance.org\u002Fexpert-edition) and to seek additional sources of data on specific fraud risks where this element is included in a risk assessment.\n\nAs a reminder, we provide free access to the Expert Edition for most organisations outside the private sector.\n\n### Learn more\n\n*   Read the [13th annual Public Edition report of the Basel AML Index](https:\u002F\u002Fbaselgovernance.org\u002Fpublications\u002Fbasel-aml-index-2024).\n*   Explore the [Basel AML Index](https:\u002F\u002Findex.baselgovernance.org\u002F).","2025-01-22","why-we-cant-ignore-fraud-despite-challenges-in-data-and-analysis-2746","Why we can’t ignore fraud despite challenges in data and analysis","https:\u002F\u002Fjam.baselgovernance.org\u002Fapi\u002Fassets\u002F9754bec5-b441-4f0c-9094-ab11dea893c9?width=1000&height=650&format=webp&quality=80",[],[52],[80],"Insights",[82,85],{"tags_id":83},{"id":84,"name":54},1346,{"tags_id":86},{"id":87,"name":88},867,"Financial crime",2746,[52],[80],[93],1092,[],[22],[],"2025-01-22T17:01:46.000Z",[],"\u002Fresources\u002Fnews\u002Fwhy-we-cant-ignore-fraud-despite-challenges-in-data-and-analysis-2746",{"id":101,"body":102,"status":6,"type":45,"date":103,"slug":104,"title":105,"image":106,"countries":107,"topic":108,"activity":109,"tags":110,"nid":111,"topics":112,"activities":113,"authors":114,"images":115,"websites":116,"area":20,"programme":20,"language":20,"translations":117,"translation_of":20,"user_created":64,"date_created":118,"user_updated":66,"date_updated":67,"content":119,"link":120},9560,"_To explore what is holding back progress in combating money laundering and terrorist financing (ML\u002FTF) around the world, the [2021 Basel AML Index report](https:\u002F\u002Findex.baselgovernance.org\u002Fdownload) examined data on money laundering vulnerabilities beyond the financial sector. Banks and other financial institutions bear the brunt of anti-money laundering AML\u002FCFT supervision and attention, but perhaps we're missing weaknesses elsewhere?_\n\n_In brief, the Basel AML Index reveals that lawyers, accountants, real estate agents, casinos, precious metal dealers,​​​​​​ and other so-called designated non-financial businesses and professions (DNFBPs) are significantly less protected against ML\u002FTF risks than financial institutions. They also do less to contribute to anti-money laundering and counter financing of terrorism (AML\u002FCFT) efforts. They should be considered a serious vulnerability in most jurisdictions’ AML\u002FCFT framework._ \n\n_We believe more supervision is urgently needed to close that gap. Extract from the full report:_\n\n### Growing attention to non-financial entities exposed to ML \u002F TF risks\n\nA significant issue highlighted by the Basel AML Index data analysis is the generally weak application of AML\u002FCFT preventive measures by non-financial entities – so-called designated non-financial businesses and professions (DNFBPs). A related weakness lies in their supervision.\n\n> #### What are DNFBPs?\n> \n> DNFBPs are non-financial entities or individuals with a particular exposure to ML\u002FTF risks due to the nature of their business. According to the FATF definition, DNFBPs include casinos; real estate agents; dealers in precious metals and precious stones; lawyers, notaries, other independent legal professionals and accountants; and trust and company service providers (TCSPs).\n> \n> In an effort to support the various DNFBPs in applying a risk-based approach to AML\u002FCFT, the FATF has issued sector-specific guidance documents for [legal professionals](https:\u002F\u002Fwww.fatf-gafi.org\u002Fpublications\u002Ffatfrecommendations\u002Fdocuments\u002Frba-legal-professionals.html), [TCSPs](https:\u002F\u002Fwww.fatf-gafi.org\u002Fpublications\u002Ffatfrecommendations\u002Fdocuments\u002Frba-trust-company-service-providers.html), [casinos](https:\u002F\u002Fwww.fatf-gafi.org\u002Fdocuments\u002Fdocuments\u002Ffatfguidanceontherisk-basedapproachforcasinos.html) and [accounting professions](https:\u002F\u002Fwww.fatf-gafi.org\u002Fmedia\u002Ffatf\u002Fdocuments\u002Freports\u002FRBA-Accounting-Profession.pdf).\n\n### In what way are DNFBPs exposed to ML\u002FTF risks?\n\nTraditionally, national AML \u002F CFT policies, standards and financial supervisory bodies have focused more on financial institutions than DNFBPs. However, the latter are important players in financial and economic sectors and have clear exposure to ML\u002FTF risks arising from tax evasion, corruption and bribery, fraud schemes, insider trading or other crimes.\n\nTo take a simple example, money launderers can buy and sell properties or precious metals to help obscure the illicit origins of their money, as one “layer” in the laundering scheme. Using corporate vehicles allows them to disguise the true ownership and control of the funds and assets – especially where [beneficial ownership registers](https:\u002F\u002Fbaselgovernance.org\u002Fblog\u002Fbeneficial-ownership-transparency-pillar-anti-money-laundering-systems-so-it-needs-stand) do not exist or are poorly implemented.\n\nMoreover, there is increasing concern among regulators that some lawyers, accountants and TCSPs are advising and assisting criminal clients with hiding and laundering illicit funds, or that an accountant is used as an intermediary to avoid scrutiny from the financial institution.\n\nSeveral structural factors emerge from the data that make DNFBPs particularly vulnerable to ML \u002F TF risks, including the top three:\n\n*   A limited understanding of ML\u002FTF risks and AML\u002FCFT obligations\n*   Poor implementation of AML\u002FCFT measures\n*   Weak monitoring and supervision\n\nThese are substantial problems that will need addressing to prevent DNFBPs acting as a dangerous loophole in AML\u002FCFT systems.\n\n### Customer due diligence and AML \u002F CFT\n\nCustomer due diligence (CDD) – knowing the identity of your customers and verifying that they really are who they say they are – is an essential aspect of identifying potential ML\u002FTF risks. The relevant FATF Recommendations are [R.10 on customer due diligence](https:\u002F\u002Fwww.cfatf-gafic.org\u002Findex.php\u002Fdocuments\u002Ffatf-40r\u002F376-fatf-recommendation-10-customer-due-diligence) and [R.22 on customer due diligence by DNFPBs](https:\u002F\u002Fwww.cfatf-gafic.org\u002Fdocuments\u002Ffatf-40r\u002F388-fatf-recommendation-22-dnfbps-customer-due-diligence). Effectiveness is measured through [Immediate Outcome (IO) 4](https:\u002F\u002Fwww.fatf-gafi.org\u002Fpublications\u002Fmutualevaluations\u002Fdocuments\u002Feffectiveness.html) on a risk-based approach to ML\u002FFT prevention and reporting of suspicious transactions.\n\n> #### What are the requirements for customer due diligence?\n> \n> CDD obligations apply to financial institutions and DNFBPs alike, for example when establishing a new business relationship, when they carry out certain transactions, and where there are doubts about previously obtained customer identification data or a direct suspicion of ML\u002FTF. The measures cover various aspects including:\n> \n> *   identifying and verifying the customer;\n> *   identifying and verifying the beneficial owner;\n> *   understanding the purpose and intended nature of the business relationship;\n> *   conducting ongoing due diligence and\u002For scrutinising transactions for consistency with the apparent customer profile.\n\n_C_DD is also an important aspect of a risk-based approach to AML\u002FCFT: where a risk assessment reveals a high risk of ML \u002F TF, enhanced CDD should be applied to gather more information about the customer, the sources of the funds, the nature of the business relationship and the purpose of the transaction. Additional monitoring can then be applied where needed.\n\nAccording to an analysis of FATF data relating to the relevant indicators (see above), DNFBPs have a much lower level of technical compliance with CDD requirements than financial institutions:\n\n*   12 jurisdictions out of the 112 evaluated are rated as non-compliant in R.22 (CDD for DNFBPs). This compares with just 2 jurisdictions that are rated as non-compliant in R.10 (CDD for financial institutions).\n*   At the other end of the scale, only 8 jurisdictions are fully compliant with R.22, compared to 17 jurisdictions that are fully compliant with R.10.\n\nThis means that lawyers, accountants, casinos, precious metal dealers, real estate agents and other DNFBPs are significantly less protected against ML\u002FTF risks and do less to contribute to AML\u002FCFT efforts. They should be considered a serious vulnerability in most jurisdictions’ AML\u002FCFT framework.\n\nDoes that mean they require greater attention and support from supervisory authorities?\n\n### Regulation and supervision of DNFBPs\n\nIn last year’s report, the Basel AML Index provided a deep dive into the quality of AML \u002F CFT supervision. We found that supervision was generally a very weak spot in countries’ AML \u002F CFT regime, and supervision of DNFBPs in particular.\n\nReviewing 2021 data on jurisdictions’ performance in FATF R.28, which sets standards for the regulation and supervision of DNFBPs, reveals that far too little has changed:\n\n*   Compliance with R.28 remains very low at 45% on average.\n*   15 jurisdictions still score a radical 0% for compliance with R.28.\n*   Only 8 jurisdictions are fully compliant with R.28.\n\nThese figures illustrate that supervision remains one of the weakest fields in AML \u002F CFT prevention. A 3% improvement across the board is far from the quantum shift that we would need to see.\n\nWhen regulators continue to pressure financial institutions (and hopefully increasingly also DNFBPs) to do better – pressure that indeed needs to be maintained – it needs to be matched with significantly more efforts to supervise these institutions. Or else, it is highly likely that the pressure will fall short of delivering real results.\n\n### More from the Basel AML Index\n\n*   Find out about the Basel AML Index, view the latest Public ranking and find out whether your organisation is eligible for a free Expert Edition account at our brand new website: [index.baselgovernance.org](https:\u002F\u002Findex.baselgovernance.org\u002F).\n*   See the [Basel AML Index 2021 press release](https:\u002F\u002Fbaselgovernance.org\u002Fnews\u002Fbasel-aml-index-2021-4-things-holding-back-global-fight-against-money-laundering).","2021-09-27","money-laundering-risks-are-we-paying-enough-attention-to-lawyers-accountants-and-others-beyond-the-financial-sector-2096","Money laundering risks: are we paying enough attention to lawyers, accountants and others beyond the financial sector?","https:\u002F\u002Fjam.baselgovernance.org\u002Fapi\u002Fassets\u002Fae0fc859-d116-4e72-8b5e-390ef1af3e52?width=1000&height=650&format=webp&quality=80",[],[52],[54],[],2096,[52],[54],[],[],[22,54],[],"2022-05-26T22:52:30.000Z",[],"\u002Fresources\u002Fnews\u002Fmoney-laundering-risks-are-we-paying-enough-attention-to-lawyers-accountants-and-others-beyond-the-financial-sector-2096",{"id":122,"body":123,"status":6,"type":45,"date":124,"slug":125,"title":126,"image":127,"countries":128,"topic":129,"activity":130,"tags":131,"nid":136,"topics":137,"activities":138,"authors":139,"images":141,"websites":142,"area":20,"programme":20,"language":20,"translations":143,"translation_of":20,"user_created":64,"date_created":144,"user_updated":66,"date_updated":145,"content":146,"link":147},9817,"During 2018 and 2019, the world has faced serious money laundering scandals involving reputable institutions. Surprisingly, abuses of financial systems were uncovered in countries that have low risk scores in the [Basel AML Index](http:\u002F\u002Findex.baselgovernance.org\u002F), like Estonia and Sweden.\n\nThese countries have correspondingly low risk scores in other indices that the Basel Institute uses to analyse the quality of anti-money laundering and counter financing of terrorism (AML\u002FCFT) frameworks and quantify corruption, financial transparency and standards, public transparency and accountability, and legal and political risks.\n\n### Are ML\u002FTF evaluation systems flawed?\n\nDoes this mean that systems for evaluating money laundering and terrorist financing (ML\u002FTF) risks – including the Basel AML Index – are fundamentally flawed or biased?\n\nNo. It does mean, however, that when using a risk assessment tool such as the Basel AML Index Expert Edition it is important to understand the [methodology](https:\u002F\u002Fwww.baselgovernance.org\u002Fbasel-aml-index\u002Fmethodology) behind the results, what it can and cannot [measure](https:\u002F\u002Fwww.baselgovernance.org\u002Fbasel-aml-index\u002Fwhat-does-basel-aml-index-measure), and which [indicators](https:\u002F\u002Fwww.baselgovernance.org\u002Fbasel-aml-index\u002Fmethodology\u002Findicators) it relies upon.\n\nThe Basel AML Index is a composite index based on 15 well-established indicators and is not anyone’s personal evaluation. If some overall scores and rankings look implausible – for example, because major money laundering scandals have occurred in supposedly low-risk countries – the key is to analyse both the indicators behind the scores and the reasons why these cases of money laundering occurred.\n\nTools are more powerful when users understand their limitations and not only their uses.\n\n### Red flags in addition to country risk\n\nTools are also more powerful when used in combination with other evidence-based tools and procedures.\n\nAn analysis of recent high-profile money laundering cases shows it is important for financial institutions and companies to check for the following red flags:\n\n*   Politically exposed persons (PEPs). Cases involving illicit money from Russia and former Soviet countries were largely connected to PEPs or powerful businesspeople with vested interests. According to [media](https:\u002F\u002Feuobserver.com\u002Fjustice\u002F144524) reports, for example, EUR 122 million were linked to Russian businessman Iskander Makhmudov. Viktor Yanukovych, the former Ukrainian President, funnelled a suspected bribe of EUR 3.7 million via Swedbank in 2011.\n*   Non-resident legal persons. It is [stated](https:\u002F\u002Fwww.moneylaunderingnews.com\u002F2018\u002F11\u002Fdanske-bank-money-laundering-scandal-the-tip-of-the-icebergs\u002F) that Russian and other non-Baltic customers accounted for a notably high percentage of Danske Bank’s Estonia business, through which over USD 200 billion are estimated to have been laundered between 2007 and 2015.\n*   Beneficial ownership and offshore jurisdictions. Shell companies are used to conceal the true nature of illicit transactions and the identities of those responsible. In the so-called [Russian Laundromat](https:\u002F\u002Fwww.occrp.org\u002Fen\u002Flaundromat\u002Fthe-russian-laundromat-exposed\u002F) scandal, to take one example of many, money entered the scheme via a set of shell companies in Russia that exist only on paper and whose ownership cannot be traced. \n*   Illicit trading. High-risk large transactions related to mis-invoicing and fictitious trade deals are a serious issue. Illicit trading schemes like fraudulent letters of credit, fake invoices, vessels re-routing to pick up illegal goods, and trading in non-existing goods were used frequently in the Russian Laundromat activity. These methods helped to mask movements of illicit money.\n*   Geographical proximity to high-risk countries. As financial crimes are global in nature and the issue of [exporting corruption](https:\u002F\u002Fwww.transparency.org\u002Fwhatwedo\u002Fpublication\u002Fexporting_corruption_2018) is now widely recognised, countries which have borders with high-risk neighbours are vulnerable to increased levels of risk. In the latest Laundromat schemes, Baltic countries served as a gateway for illicit funds from former Soviet countries to enter the Western banking system.\n\n### Measuring money laundering risks\n\nThe 8th edition of the [Basel AML Index](\u002Fnode\u002F229), an independent annual ranking that assesses the risk of money laundering and terrorist financing (ML\u002FTF) around the world, will be released on 19 August 2019.","2019-08-16","what-can-we-learn-from-recent-money-laundering-cases-992","What can we learn from recent money laundering cases?","https:\u002F\u002Fjam.baselgovernance.org\u002Fapi\u002Fassets\u002F515a9ba9-91a8-4417-a6e9-333901cd19d3?width=1000&height=650&format=webp&quality=80",[],[52],[54,80],[132],{"tags_id":133},{"id":134,"name":135},818,"Anti-money laundering",992,[52],[54,80],[140],1261,[],[22,54],[],"2022-05-26T22:56:06.000Z","2025-12-08T23:00:53.000Z",[],"\u002Fresources\u002Fnews\u002Fwhat-can-we-learn-from-recent-money-laundering-cases-992",{"id":149,"body":150,"status":6,"type":45,"date":151,"slug":152,"title":153,"image":154,"countries":155,"topic":156,"activity":158,"tags":159,"nid":162,"topics":163,"activities":165,"authors":166,"images":168,"websites":169,"area":20,"programme":20,"language":20,"translations":170,"translation_of":20,"user_created":64,"date_created":171,"user_updated":172,"date_updated":173,"content":174,"link":175},10406,"_Our recently released [Basel AML Index 2023](https:\u002F\u002Findex.baselgovernance.org\u002F) says that c__ountries need to supercharge their efforts to understand the evolving financial crime risks of new technologies – especially cryptocurrencies and other virtual assets._\n\n_G__lobal performance in this area has been plummeting ever since the FATF strengthened its [Recommendation 15](https:\u002F\u002Fwww.fatf-gafi.org\u002Fcontent\u002Fdam\u002Ffatf-gafi\u002Fguidance\u002FUpdated-Guidance-VA-VASP.pdf) on New Technologies, covering virtual assets and virtual asset service providers (VASPs). According to our analysis, average levels of compliance with this Recommendation have now dropped to the second weakest of all 40 Recommendations._\n\n_We argue that getting regulation, supervision and enforcement right is the only way to foster a thriving FinTech industry while protecting financial integrity, consumers and investors._\n\nCryptocurrencies and other virtual assets keep many financial crime professionals up at night. There are billion-dollar [scandals](https:\u002F\u002Fwww.investopedia.com\u002Fwhat-went-wrong-with-ftx-6828447) and [scams](https:\u002F\u002Fwww.techtarget.com\u002Fwhatis\u002Ffeature\u002FCommon-cryptocurrency-scams), rollercoaster-style [volatility](https:\u002F\u002Fwww.investopedia.com\u002Farticles\u002Finvesting\u002F052014\u002Fwhy-bitcoins-value-so-volatile.asp) and indications that organised crime groups are using cryptocurrencies to [hide and launder](https:\u002F\u002Fwww.europol.europa.eu\u002Fmedia-press\u002Fnewsroom\u002Fnews\u002Fshaping-international-response-against-criminal-misuse-of-cryptocurrencies) illicit funds.\n\nTerrorist groups including Hamas are known to have [received funding](https:\u002F\u002Fwww.reuters.com\u002Fworld\u002Fmiddle-east\u002Fhamas-armed-wing-announces-suspension-bitcoin-fundraising-2023-04-28\u002F) via cryptocurrencies, while others are [taking advantage](https:\u002F\u002Fwww.csis.org\u002Fanalysis\u002Fcryptocurrencies-and-us-sanctions-evasion-implications-russia) of cryptocurrencies to circumvent sanctions, gain revenue through [hacks](https:\u002F\u002Fwww.elliptic.co\u002Fblog\u002Fhow-the-lazarus-group-is-stepping-up-crypto-hacks-and-changing-its-tactics) and cyber scams, and fund nuclear weapons programmes.\n\nAre countries too relaxed or simply being cautious, as one may expect with any new and complex phenomenon? Perhaps they are just unsure how to regulate and supervise this fast-evolving industry? And is law enforcement up to the task?\n\nThe risks are high, and so is the uncertainty in the sector. However, there are reasons to be cautiously optimistic.\n\n*   First, because despite the fact that the crypto market is booming in terms of the number of transactions and their overall value, the percentage of criminal funds flowing through blockchains is decreasing constantly. While crypto’s first years saw nearly 20 percent of Bitcoin’s daily activity moving through illicit online markets like Silk Road, in 2022 illicit activities were [estimated](https:\u002F\u002Fgo.chainalysis.com\u002Fcrypto-myths.html) to represent less than 1 percent of the total transaction volume.\n*   Second, because regulations are becoming stronger and more harmonised in the world’s major financial centres.\n*   And third, because initial enforcement successes point at the huge potential to trace illicit financial flows and recover stolen funds.\n\n### What data do we have?\n\nThe main source of data on countries’ performance in regulating the crypto industry for AML\u002FCFT purposes comes from the FATF.\n\nIn 2018, the FATF extended its [Recommendation 15](https:\u002F\u002Fwww.fatf-gafi.org\u002Fcontent\u002Fdam\u002Ffatf-gafi\u002Fguidance\u002FUpdated-Guidance-VA-VASP.pdf) on new technologies to specifically include virtual assets and VASPs.\n\nOf the 161 jurisdictions assessed by the FATF from December 2017 until September 2023, the results for Recommendation 15 are concerning. Only 12.5 percent are evaluated as “compliant”; many more (20.5 percent) are “non-compliant”.\n\nTechnical compliance with Recommendation 15 across 161 assessed countries\n\nAverage global performance in technical compliance is just 43 percent. This is well below the average across all 40 Recommendations (65 percent) and the second lowest after the non-profit sector. And performance has worsened significantly compared to [our analysis in 2021](https:\u002F\u002Findex.baselgovernance.org\u002Fapi\u002Fuploads\u002FBasel_AML_Index_2021_10th_Edition_8a5d126c66.pdf) when the global average was at 63 percent.\n\nSome of this dramatic fall was caused by this year’s assessment of fifty new jurisdictions, but more than 30 percent of jurisdictions already included in 2021 were downgraded as a result of FATF follow-up reports.\n\n### What makes for good performance?\n\nLow levels of compliance with Recommendation 15 are especially high in places with the most to gain from innovative financial technologies, including the speed and low cost of transactions on the block- chain. Sub-Saharan Africa and South Asia, where many people remain excluded from the traditional financial sector, are currently languishing at the bottom of the list with 19 percent and 25 percent compliance respectively.\n\nTechnical compliance with FATF Recommendation 15 on new technologies: a regional picture\n\nThe few countries that are doing well in Recommendation 15 have common characteristics:\n\n*   They identify and assess ML\u002FTF risks related to new technologies, including crypto, through national and sectoral risk assessments.\n*   They have specific, binding and enforceable obligations for reporting entities (such as banks and non-financial businesses and professions) to manage and mitigate the ML\u002FTF risks of new technologies.\n*   Supervisory authorities apply a risk-based approach to supervising new technologies and proactively seek to identify and assess ML\u002FTF risks in relation to new business practices and\n*   Financial institutions establish risk mitigation measures to reduce ML\u002FTF risks identified in new business practices and products.\n\nRegulators and supervisors who have had less exposure to crypto would do well to learn from their more advanced peers.\n\n### Regulation and supervision: trial, error and improvement\n\nWhile nobody – other than the criminals – benefits from having VASPs that are unregulated and unlicensed, it is also natural for countries to be unsure and hesitant about how to regulate and supervise the fast-evolving crypto ecosystem:\n\nFirst, because virtual assets are by nature a complex field that is highly volatile and evolving fast.\n\nSecond, because the risks seem both very large and very remote. The infamous [collapse of crypto exchange FTX](https:\u002F\u002Fwww.investopedia.com\u002Fwhat-went-wrong-with-ftx-6828447) wiped out billions of dollars in virtual assets. Yet its collapse shook only the crypto industry, leaving the traditional financial sector that is still the backbone of the global economy unscathed.\n\nThird, because of the unintended consequences of regulating and enforcing too loosely or too tightly, or with measures that don’t fit the industry’s nature and needs. Experiences such as [Estonia’s](https:\u002F\u002Ffiu.ee\u002Fen\u002Fnews\u002F100-active-authorisations-estonia-providing-virtual-asset-services) highlight the difficulties in designing regulation that will foster innovation and growth of Fin-Tech companies while keeping consumers and investors safe.\n\nPerhaps as a result of this uncertainty, countries are [experimenting](https:\u002F\u002Fbaselgovernance.org\u002Fpublications\u002Fwp-38) with a wide range of ways to regulate and supervise the crypto industry.\n\nThis experimentation is natural and a good thing – as long as the authorities evaluate and learn from those experiments, share experiences internationally, and consult closely with the private sector and other stakeholders to ensure the rules are fit for purpose.\n\n> ### Flipside of the \"simple licensing process\" in Estonia \n> \n> In 2017, Estonia became one of the first EU member states to enact legislation that regulates and controls cryptocurrencies. It introduced a simple licensing process and provided favourable tax regimes for virtual assets companies. The crypto market boomed in the country: by mid-2021, there were 650 active authorisations of VASPs.\n> \n> However, after examining the market, the authorities found that simplified regulations were often misused. Some companies provided false corporate information:\n> \n> *   some businesses registered board members\u002Fdirectors without their knowledge or consent;\n>     \n> *   employees of these businesses submitted falsified CVs;\n>     \n> *   identical business plans were copied from one online website, using poor-quality machine translation.\n>     \n>     Many applications were submitted through the same providers of legal services or company services.\n>     \n>     To correct this and ensure only legitimate businesses were operating as VASPs, Estonia quickly introduced new legislation strengthening AML requirements for VASPs.\n>     \n>     Since the new legislation came into force on 15 March 2023, authorisations for 189 companies were revoked for non-compliance. Almost 200 VASPs voluntarily closed down. By 1 May 2023, only 100 active VASPs remained registered and operating.\n>     \n>     The case shows the challenges of getting regulation right. Ultimately Estonia only wants to encourage legitimate companies that will protect customer and investor funds and not increase its risks of money laundering and terrorist financing.\n>     \n\n### Reasons to be optimistic\n\nDespite the bleak picture seen in the data, some developments are encouraging:\n\nFirst, regulation is becoming stronger and more joined up. In the EU, the new Markets in Crypto-Assets ([MiCA](https:\u002F\u002Feur-lex.europa.eu\u002Flegal-content\u002FEN\u002FTXT\u002F?uri=CELEX%3A52020PC0593)) regulation aims to create a comprehensive framework for regulating crypto assets within the bloc. VASPs (called CASPs in the regulation) will need to be licensed in their host country, to adhere to AML\u002FCFT regulations like other financial institutions and to operate more transparently by, for example, providing potential investors with detailed information.\n\nIn parallel, the Transfer of Funds Regulation will ensure that transfers of cryptocurrencies – like other transfers of funds – will contain information about the sender and receiver of the funds. This implements the so-called “travel rule” of the FATF Recommendation 15, a key weak spot according to the FATF’s latest [review](https:\u002F\u002Fwww.fatf-gafi.org\u002Fcontent\u002Fdam\u002Ffatf-gafi\u002Fguidance\u002FJune2023-Targeted-Update-VA-VASP.pdf.coredownload.inline.pdf) on the matter.\n\nRegulations like MiCA will reduce the risks of regulatory arbitrage or “regulator shopping”, at least within the EU. As always, the crux will be in how effectively the legislation is implemented and in the resources and knowledge of supervisors and law enforcement. Also crucial, of course, is whether other regions follow suit with equally robust and harmonised regulation.\n\nSecond, [major enforcement successes](https:\u002F\u002Fbaselgovernance.org\u002Fblog\u002Fcrypto-asset-recovery-qa-part-1-scope-laws-and-cooperation) by some countries show the huge potential of catching organised criminals and recovering assets. These will hopefully act as a deterrent for other criminals tempted to misuse cryptocurrency for illegal purposes.\n\nThe US seized a staggering [USD 3.6 billion in Bitcoin](https:\u002F\u002Fwww.justice.gov\u002Fopa\u002Fpr\u002Ftwo-arrested-alleged-conspiracy-launder-45-billion-stolen-cryptocurrency) in connection to the 2016 Bitfinex hack – the largest ever financial seizure. The UK has [reformed its laws](https:\u002F\u002Fwww.gov.uk\u002Fgovernment\u002Fnews\u002Frobust-new-laws-to-fight-corruption-money-laundering-and-fraud) to make it easier to confiscate cryptocurrencies linked to crime after recovering over USD 370 million in crypto in 2022. Other countries are seeing their first major recoveries of crypto assets, with more and more cases in the pipeline.\n\n### Looking into the crypto ball\n\nPoor performance is a concern, but also to be expected given the growth and complexity of the crypto industry globally. And there is also reason for optimism.\n\nFew can predict how the crypto industry will evolve and the exact implications for preventing money laundering and terrorist financing. But the data is clear: countries at all stages of the FATF evaluation process need to invest serious, immediate attention and resources in understanding and addressing the risks posed by virtual assets and other new technologies.\n\nPartly for the sake of meeting FATF standards – but mostly for the sake of fostering positive financial innovation while preventing further misuse for criminals and protecting customers and investors.\n\n### More from the Basel AML Index\n\n*   Find out about the Basel AML Index, view the latest Public ranking and find out whether your organisation is eligible for a free Expert Edition account at our website: [index.baselgovernance.org](https:\u002F\u002Findex.baselgovernance.org\u002F).\n*   See the [Basel AML Index 2023 press release.](https:\u002F\u002Fbaselgovernance.org\u002Fnews\u002Fbasel-aml-index-2023-action-money-laundering-more-urgent-ever)\n*   Watch [Malcolm Wright](https:\u002F\u002Fwww.youtube.com\u002Fwatch?v=DWRkNUq0Rxw&t=996s) speaking about the regulation of virtual assets at the Basel AML Index online launch event.","2023-11-23","virtual-currencies-are-we-missing-a-trick-insights-from-the-basel-aml-index-2023-2541","Virtual currencies: are we missing a trick? Insights from the Basel AML Index 2023","https:\u002F\u002Fjam.baselgovernance.org\u002Fapi\u002Fassets\u002Fb0a10ca2-60b4-4bc1-b1ad-98416724174e?width=1000&height=650&format=webp&quality=80",[],[52,157],"Asset Recovery",[54],[160],{"tags_id":161},{"id":84,"name":54},2541,[52,164],"Asset Recovery and Enforcement",[54],[167],1131,[],[22,54],[],"2023-11-23T17:01:37.000Z","3d9ff205-1640-4f34-b5b6-86977f51bbd6","2026-05-29T22:22:28.000Z",[],"\u002Fresources\u002Fnews\u002Fvirtual-currencies-are-we-missing-a-trick-insights-from-the-basel-aml-index-2023-2541",{"id":177,"body":178,"status":6,"type":45,"date":151,"slug":179,"title":153,"image":180,"countries":181,"topic":182,"activity":183,"tags":184,"nid":185,"topics":186,"activities":187,"authors":188,"images":189,"websites":190,"area":20,"programme":20,"language":20,"translations":191,"translation_of":20,"user_created":64,"date_created":192,"user_updated":172,"date_updated":193,"content":194,"link":195},10530,"_Our recently released [Basel AML Index 2023](https:\u002F\u002Findex.baselgovernance.org\u002F) says that countries need to supercharge their efforts to understand the evolving financial crime risks of new technologies – especially cryptocurrencies and other virtual assets._\n\n_Global performance in this area has been plummeting ever since the FATF strengthened its [Recommendation 15](https:\u002F\u002Fwww.fatf-gafi.org\u002Fcontent\u002Fdam\u002Ffatf-gafi\u002Fguidance\u002FUpdated-Guidance-VA-VASP.pdf) on New Technologies, covering virtual assets and virtual asset service providers (VASPs). According to our analysis, average levels of compliance with this Recommendation have now dropped to the second weakest of all 40 Recommendations._\n\n_We argue that getting regulation, supervision and enforcement right is the only way to foster a thriving FinTech industry while protecting financial integrity, consumers and investors._\n\nCryptocurrencies and other virtual assets keep many financial crime professionals up at night. There are billion-dollar [scandals](https:\u002F\u002Fwww.investopedia.com\u002Fwhat-went-wrong-with-ftx-6828447) and [scams](https:\u002F\u002Fwww.techtarget.com\u002Fwhatis\u002Ffeature\u002FCommon-cryptocurrency-scams), rollercoaster-style [volatility](https:\u002F\u002Fwww.investopedia.com\u002Farticles\u002Finvesting\u002F052014\u002Fwhy-bitcoins-value-so-volatile.asp) and indications that organised crime groups are using cryptocurrencies to [hide and launder](https:\u002F\u002Fwww.europol.europa.eu\u002Fmedia-press\u002Fnewsroom\u002Fnews\u002Fshaping-international-response-against-criminal-misuse-of-cryptocurrencies) illicit funds.\n\nTerrorist groups including Hamas are known to have [received funding](https:\u002F\u002Fwww.reuters.com\u002Fworld\u002Fmiddle-east\u002Fhamas-armed-wing-announces-suspension-bitcoin-fundraising-2023-04-28\u002F) via cryptocurrencies, while others are [taking advantage](https:\u002F\u002Fwww.csis.org\u002Fanalysis\u002Fcryptocurrencies-and-us-sanctions-evasion-implications-russia) of cryptocurrencies to circumvent sanctions, gain revenue through [hacks](https:\u002F\u002Fwww.elliptic.co\u002Fblog\u002Fhow-the-lazarus-group-is-stepping-up-crypto-hacks-and-changing-its-tactics) and cyber scams, and fund nuclear weapons programmes.\n\nAre countries too relaxed or simply being cautious, as one may expect with any new and complex phenomenon? Perhaps they are just unsure how to regulate and supervise this fast-evolving industry? And is law enforcement up to the task?\n\nThe risks are high, and so is the uncertainty in the sector. However, there are reasons to be cautiously optimistic.\n\n*   First, because despite the fact that the crypto market is booming in terms of the number of transactions and their overall value, the percentage of criminal funds flowing through blockchains is decreasing constantly. While crypto’s first years saw nearly 20 percent of Bitcoin’s daily activity moving through illicit online markets like Silk Road, in 2022 illicit activities were [estimated](https:\u002F\u002Fgo.chainalysis.com\u002Fcrypto-myths.html) to represent less than 1 percent of the total transaction volume.\n*   Second, because regulations are becoming stronger and more harmonised in the world’s major financial centres.\n*   And third, because initial enforcement successes point at the huge potential to trace illicit financial flows and recover stolen funds.\n\n### What data do we have?\n\nThe main source of data on countries’ performance in regulating the crypto industry for AML\u002FCFT purposes comes from the FATF.\n\nIn 2018, the FATF extended its [Recommendation 15](https:\u002F\u002Fwww.fatf-gafi.org\u002Fcontent\u002Fdam\u002Ffatf-gafi\u002Fguidance\u002FUpdated-Guidance-VA-VASP.pdf) on new technologies to specifically include virtual assets and VASPs.\n\nOf the 161 jurisdictions assessed by the FATF from December 2017 until September 2023, the results for Recommendation 15 are concerning. Only 12.5 percent are evaluated as “compliant”; many more (20.5 percent) are “non-compliant”.\n\nTechnical compliance with Recommendation 15 across 161 assessed countries\n\nAverage global performance in technical compliance is just 43 percent. This is well below the average across all 40 Recommendations (65 percent) and the second lowest after the non-profit sector. And performance has worsened significantly compared to [our analysis in 2021](https:\u002F\u002Findex.baselgovernance.org\u002Fapi\u002Fuploads\u002FBasel_AML_Index_2021_10th_Edition_8a5d126c66.pdf) when the global average was at 63 percent.\n\nSome of this dramatic fall was caused by this year’s assessment of fifty new jurisdictions, but more than 30 percent of jurisdictions already included in 2021 were downgraded as a result of FATF follow-up reports.\n\n### What makes for good performance?\n\nLow levels of compliance with Recommendation 15 are especially high in places with the most to gain from innovative financial technologies, including the speed and low cost of transactions on the block- chain. Sub-Saharan Africa and South Asia, where many people remain excluded from the traditional financial sector, are currently languishing at the bottom of the list with 19 percent and 25 percent compliance respectively.\n\nTechnical compliance with FATF Recommendation 15 on new technologies: a regional picture\n\nThe few countries that are doing well in Recommendation 15 have common characteristics:\n\n*   They identify and assess ML\u002FTF risks related to new technologies, including crypto, through national and sectoral risk assessments.\n*   They have specific, binding and enforceable obligations for reporting entities (such as banks and non-financial businesses and professions) to manage and mitigate the ML\u002FTF risks of new technologies.\n*   Supervisory authorities apply a risk-based approach to supervising new technologies and proactively seek to identify and assess ML\u002FTF risks in relation to new business practices and\n*   Financial institutions establish risk mitigation measures to reduce ML\u002FTF risks identified in new business practices and products.\n\nRegulators and supervisors who have had less exposure to crypto would do well to learn from their more advanced peers.\n\n### Regulation and supervision: trial, error and improvement\n\nWhile nobody – other than the criminals – benefits from having VASPs that are unregulated and unlicensed, it is also natural for countries to be unsure and hesitant about how to regulate and supervise the fast-evolving crypto ecosystem:\n\nFirst, because virtual assets are by nature a complex field that is highly volatile and evolving fast.\n\nSecond, because the risks seem both very large and very remote. The infamous [collapse of crypto exchange FTX](https:\u002F\u002Fwww.investopedia.com\u002Fwhat-went-wrong-with-ftx-6828447) wiped out billions of dollars in virtual assets. Yet its collapse shook only the crypto industry, leaving the traditional financial sector that is still the backbone of the global economy unscathed.\n\nThird, because of the unintended consequences of regulating and enforcing too loosely or too tightly, or with measures that don’t fit the industry’s nature and needs. Experiences such as [Estonia’s](https:\u002F\u002Ffiu.ee\u002Fen\u002Fnews\u002F100-active-authorisations-estonia-providing-virtual-asset-services) highlight the difficulties in designing regulation that will foster innovation and growth of Fin-Tech companies while keeping consumers and investors safe.\n\nPerhaps as a result of this uncertainty, countries are [experimenting](https:\u002F\u002Fbaselgovernance.org\u002Fpublications\u002Fwp-38) with a wide range of ways to regulate and supervise the crypto industry.\n\nThis experimentation is natural and a good thing – as long as the authorities evaluate and learn from those experiments, share experiences internationally, and consult closely with the private sector and other stakeholders to ensure the rules are fit for purpose.\n\n### Flipside of the \"simple licensing process\" in Estonia\n\nIn 2017, Estonia became one of the first EU member states to enact legislation that regulates and controls cryptocurrencies. It introduced a simple licensing process and provided favourable tax regimes for virtual assets companies. The crypto market boomed in the country: by mid-2021, there were 650 active authorisations of VASPs.\n\nHowever, after examining the market, the authorities found that simplified regulations were often misused. Some companies provided false corporate information:\n\n*   some businesses registered board members\u002Fdirectors without their knowledge or consent;\n    \n*   employees of these businesses submitted falsified CVs;\n    \n*   identical business plans were copied from one online website, using poor-quality machine translation.\n    \n\nMany applications were submitted through the same providers of legal services or company services.\n\nTo correct this and ensure only legitimate businesses were operating as VASPs, Estonia quickly introduced new legislation strengthening AML requirements for VASPs.\n\nSince the new legislation came into force on 15 March 2023, authorisations for 189 companies were revoked for non-compliance. Almost 200 VASPs voluntarily closed down. By 1 May 2023, only 100 active VASPs remained registered and operating.\n\nThe case shows the challenges of getting regulation right. Ultimately Estonia only wants to encourage legitimate companies that will protect customer and investor funds and not increase its risks of money laundering and terrorist financing.\n\n### Reasons to be optimistic\n\nDespite the bleak picture seen in the data, some developments are encouraging:\n\nFirst, regulation is becoming stronger and more joined up. In the EU, the new Markets in Crypto-Assets ([MiCA](https:\u002F\u002Feur-lex.europa.eu\u002Flegal-content\u002FEN\u002FTXT\u002F?uri=CELEX%3A52020PC0593)) regulation aims to create a comprehensive framework for regulating crypto assets within the bloc. VASPs (called CASPs in the regulation) will need to be licensed in their host country, to adhere to AML\u002FCFT regulations like other financial institutions and to operate more transparently by, for example, providing potential investors with detailed information.\n\nIn parallel, the Transfer of Funds Regulation will ensure that transfers of cryptocurrencies – like other transfers of funds – will contain information about the sender and receiver of the funds. This implements the so-called “travel rule” of the FATF Recommendation 15, a key weak spot according to the FATF’s latest [review](https:\u002F\u002Fwww.fatf-gafi.org\u002Fcontent\u002Fdam\u002Ffatf-gafi\u002Fguidance\u002FJune2023-Targeted-Update-VA-VASP.pdf.coredownload.inline.pdf) on the matter.\n\nRegulations like MiCA will reduce the risks of regulatory arbitrage or “regulator shopping”, at least within the EU. As always, the crux will be in how effectively the legislation is implemented and in the resources and knowledge of supervisors and law enforcement. Also crucial, of course, is whether other regions follow suit with equally robust and harmonised regulation.\n\nSecond, [major enforcement successes](https:\u002F\u002Fbaselgovernance.org\u002Fblog\u002Fcrypto-asset-recovery-qa-part-1-scope-laws-and-cooperation) by some countries show the huge potential of catching organised criminals and recovering assets. These will hopefully act as a deterrent for other criminals tempted to misuse cryptocurrency for illegal purposes.\n\nThe US seized a staggering [USD 3.6 billion in Bitcoin](https:\u002F\u002Fwww.justice.gov\u002Fopa\u002Fpr\u002Ftwo-arrested-alleged-conspiracy-launder-45-billion-stolen-cryptocurrency) in connection to the 2016 Bitfinex hack – the largest ever financial seizure. The UK has [reformed its laws](https:\u002F\u002Fwww.gov.uk\u002Fgovernment\u002Fnews\u002Frobust-new-laws-to-fight-corruption-money-laundering-and-fraud) to make it easier to confiscate cryptocurrencies linked to crime after recovering over USD 370 million in crypto in 2022. Other countries are seeing their first major recoveries of crypto assets, with more and more cases in the pipeline.\n\n### Looking into the crypto ball\n\nPoor performance is a concern, but also to be expected given the growth and complexity of the crypto industry globally. And there is also reason for optimism.\n\nFew can predict how the crypto industry will evolve and the exact implications for preventing money laundering and terrorist financing. But the data is clear: countries at all stages of the FATF evaluation process need to invest serious, immediate attention and resources in understanding and addressing the risks posed by virtual assets and other new technologies.\n\nPartly for the sake of meeting FATF standards – but mostly for the sake of fostering positive financial innovation while preventing further misuse for criminals and protecting customers and investors.\n\n### More from the Basel AML Index\n\n*   Find out about the Basel AML Index, view the latest Public ranking and find out whether your organisation is eligible for a free Expert Edition account at our website: [index.baselgovernance.org](https:\u002F\u002Findex.baselgovernance.org\u002F).\n*   See the [Basel AML Index 2023 press release.](https:\u002F\u002Fbaselgovernance.org\u002Fnews\u002Fbasel-aml-index-2023-action-money-laundering-more-urgent-ever)\n*   Watch [Malcolm Wright](https:\u002F\u002Fwww.youtube.com\u002Fwatch?v=DWRkNUq0Rxw&t=996s) speaking about the regulation of virtual assets at the Basel AML Index online launch event.","virtual-currencies-are-we-missing-a-trick-insights-from-the-basel-aml-index-2023-2757","https:\u002F\u002Fjam.baselgovernance.org\u002Fapi\u002Fassets\u002F649346a3-7629-4963-a1a2-f96d6fb5d89e?width=1000&height=650&format=webp&quality=80",[],[52,157],[80],[],2757,[52,164],[80],[],[],[22],[],"2025-02-03T17:01:41.000Z","2026-05-29T22:22:34.000Z",[],"\u002Fresources\u002Fnews\u002Fvirtual-currencies-are-we-missing-a-trick-insights-from-the-basel-aml-index-2023-2757",{"id":197,"body":198,"status":6,"type":45,"date":199,"slug":200,"title":201,"image":202,"countries":203,"topic":205,"activity":206,"tags":208,"nid":209,"topics":210,"activities":211,"authors":212,"images":214,"websites":215,"area":20,"programme":20,"language":20,"translations":216,"translation_of":20,"user_created":64,"date_created":217,"user_updated":66,"date_updated":67,"content":218,"link":219},9691,"_This week, our team in Mozambique has started a series of virtual training courses for prosecutors, investigators and judges across 11 provinces. Getting to this point has been quite a challenge, as Senior Asset Recovery Specialist Margarida Bandeira de Lima explains below. It shows the vital importance of basic technology in enabling public officials responsible for fighting corruption to do their jobs._\n\nIt was quite amazing to see how quickly the world switched from classrooms to virtual classrooms as the pandemic spread. For those with good access to technology, the switch to virtual education has mostly worked better than we feared.\n\nIt has also worked better than we feared at the Basel Institute on Governance. Our International Centre for Asset Recovery (ICAR) training team has already successfully delivered several [training programmes online](https:\u002F\u002Fwww.baselgovernance.org\u002Fnews\u002Flearning-through-doing-even-online-east-africa-training-arinea), despite the challenges of replicating their intensive, hands-on training approach in the virtual space.\n\nIn Mozambique, our local team was looking forward to rolling out a series of essential training courses to prosecutors, investigators and judges across 11 provinces from March to July this year.\n\nIn the first phase we planned to cover several vital topics: money laundering with a focus on the seizure and confiscation of assets, breach of professional secrecy, and suspicious transaction reports. We also planned to introduce the proposed developments in Mozambican asset recovery legislation being considered by the Assembly of the Republic in the draft [Asset Recovery Bill](https:\u002F\u002Fwww.baselgovernance.org\u002Fnews\u002Fmilestone-mozambiques-journey-more-effective-recovery-stolen-assets). \n\nWe were going to visit each province in turn and invite all participants to a central training centre. We wanted to spend the mornings delivering training and the afternoons mentoring prosecutors in person to help them apply the new concepts directly to their most complex cases.\n\nThen the pandemic hit.\n\nPhysical meetings were suddenly impossible, so we had to switch to virtual training via Zoom. But internet connections in many Mozambican provinces are weak, and not all participants have their own computers.\n\nSo, we worked with staff of the Procurator General’s Office to arrange internet modems to be flown out to the various provinces. We also arranged for laptops to be rented, which in many cases was not so easy.\n\nWe also had to scale back and postpone the plans for mentoring on real cases, as there are currently no real possibilities for secure data-sharing.\n\nThe newly flown-out modems and computers are located at the provincial headquarters. Some of the trainees cannot travel there. Social distancing requirements also mean we have had to limit the number of trainees to three prosecutors, two investigators and one judge per province. The aim – in the short term at least – is for these trainees to try to pass on their new knowledge and skills to their colleagues.\n\nOur virtual training course covers the same topics as planned but in a shorter time to avoid computer fatigue. We are grouping provinces in the mornings and afternoons. This will also, we hope, encourage peer learning and domestic coordination on corruption and money laundering\u002Fasset recovery cases.\n\nSo, it has been challenging to switch to virtual training in Mozambique. And it has exposed the gap between those with good access to technology and those who work in contexts with weak internet and a lack of computers and secure file-sharing systems. I fear that criminals have far better access to these things than the officials in charge of stopping them and recovering the proceeds of their crimes.\n\nBack to the training. What matters is this: the first virtual training sessions have taken place in the provinces and the feedback has been excellent and supportive so far – we are lucky to have such engaged and eager participants. We are also grateful to the programme donor, the Swiss Agency for Development and Cooperation (SDC), with whose funding we were able to arrange the modems and rented computers.\n\nWe will continue to adjust and adapt as we move into future phases of training. The next phase will include training on the new multidisciplinary Asset Recovery Office that we are help to set up in order to build specialist capacity and facilitate inter-agency and international cooperation on asset recovery.","2020-08-20","flying-modems-and-fast-adjustments-how-were-switching-to-virtual-training-in-mozambique-1839","Flying modems and fast adjustments – how we’re switching to virtual training in Mozambique ","https:\u002F\u002Fjam.baselgovernance.org\u002Fapi\u002Fassets\u002F7c81df98-0073-495c-be92-e20e44b68bb1?width=1000&height=650&format=webp&quality=80",[204],7393,[14],[207],"Training",[],1839,[],[207],[213],1213,[],[22],[],"2022-05-26T22:54:21.000Z",[],"\u002Fresources\u002Fnews\u002Fflying-modems-and-fast-adjustments-how-were-switching-to-virtual-training-in-mozambique-1839",{"id":221,"body":222,"status":6,"type":45,"date":223,"slug":224,"title":225,"image":226,"countries":227,"topic":229,"activity":231,"tags":232,"nid":233,"topics":234,"activities":235,"authors":236,"images":238,"websites":239,"area":20,"programme":20,"language":20,"translations":240,"translation_of":20,"user_created":64,"date_created":241,"user_updated":66,"date_updated":8,"content":242,"link":243},9933,"At the [Illegal Wildlife Trade (IWT) conference](https:\u002F\u002Fwww.gov.uk\u002Fgovernment\u002Ftopical-events\u002Flondon-conference-on-the-illegal-wildlife-trade-2018) on 11 and 12 October 2018, global leaders and senior officials will gather in London to talk about the rampant trafficking of ivory, rhino horn and other wildlife products. Will all the talking translate into action this time? Because the organised crime groups that profit from the [multi-billion-dollar market in illegal wildlife products](https:\u002F\u002Fwww.weforum.org\u002Fagenda\u002F2016\u002F09\u002Ffighting-illegal-wildlife-and-forest-trade\u002F) don’t care about toothless commitments and pledges.\n\nThe magnificent wildlife that supports Kenya’s booming tourism industry is more valuable to criminals dead, hacked to pieces and packed into shipping containers heading to Asia than alive and roaming free across the savannah. The same is true throughout Africa for endangered rhinos, elephants, pangolins, big cats, turtles, fish, snakes and so much more.\n\nThe brains behind the trafficking of illegal wildlife products don’t need to be too clever. It is simple supply and demand, and it can be extremely lucrative. Plus, even Kenya’s comparatively strict wildlife laws are not a great deterrent in practice. You can get [life imprisonment for smuggling cannabis](https:\u002F\u002Fwww.standardmedia.co.ke\u002Farticle\u002F2001280650\u002Fman-sentenced-to-life-imprisonment-for-trafficking-bhang-worth-sh23-250) but get off with a fine for possession of a game trophy.\n\nOn the supply side, there have been [productive efforts in Kenya to combat poaching](https:\u002F\u002Fwww.the-star.co.ke\u002Fnews\u002F2017\u002F11\u002F30\u002Felephant-poaching-declines-in-kenya-focus-turns-to-world-markets_c1677846). On the demand side, large amounts of wildlife commodities have been seized in or en route to Asia and the Middle East. How many of these seizures have led to convictions in Kenya? Zero. That is shameful, because porous land borders and impunity at ports have made Kenya the route of choice for illegal wildlife products from as far away as South Africa.\n\nMany obvious things we can do to stop wildlife trafficking are not being done efficiently or systematically due to a lack of resources and capacity on the ground. [Financial investigation](https:\u002F\u002Fwww.newsweek.com\u002Ffollowing-money-how-financial-investigation-can-combat-poaching-kenya-476506), for example. Traffickers need to make payments to rent properties and shipping containers or book berths on vessels. Businesses can provide cover for moving large amounts of money and commodities without attracting attention. These leads can and should be pursued through smarter collaboration between banks and law enforcement.\n\n[Technology](https:\u002F\u002Fedition.cnn.com\u002F2012\u002F08\u002F30\u002Ftech\u002Fsocial-media\u002Ffighting-crime-social-media\u002Findex.html) is another area that investigators and prosecutors need to embrace and understand. Criminals don’t meet in darkened rooms these days – they use their phones to strike deals, agree sums and organise logistics. Not to mention those who give themselves away on social media by posting selfies and flaunting their wealth.\n\nThirdly, international collaboration desperately needs reinforcing. How many more traffickers would get locked up with better collaboration between law enforcement agencies in the countries of poaching, transit and destination?\n\nThose of us who care about the destruction of Africa’s wildlife – and the livelihoods that depend legally on it – are hoping that London’s IWT conference will not simply be another opportunity for tea and a chat. We want to see more resources channelled into joined-up activities that really make a difference on the ground. That means practical, expert mentoring to build capacity and streamline a disjointed intelligence system. It means supporting local law enforcement agencies with whatever they need to more effectively investigate and prosecute wildlife crime. And ultimately, to prevent the devastation of our continent’s endangered flora and fauna for personal gain.","2018-10-10","to-eradicate-wildlife-crime-in-kenya-we-must-fight-it-on-the-ground-74","To eradicate wildlife crime in Kenya, we must fight it on the ground","https:\u002F\u002Fjam.baselgovernance.org\u002Fapi\u002Fassets\u002Fadd4d199-cbd7-4ca2-825f-8ee0a18e4919?width=1000&height=650&format=webp&quality=80",[228],7518,[230],"Green Corruption",[80],[],74,[230],[80],[237],1280,[],[22],[],"2022-05-26T22:57:36.000Z",[],"\u002Fresources\u002Fnews\u002Fto-eradicate-wildlife-crime-in-kenya-we-must-fight-it-on-the-ground-74",{"id":245,"body":246,"status":6,"type":10,"date":247,"slug":248,"title":249,"image":250,"countries":251,"topic":253,"activity":254,"tags":257,"nid":258,"topics":259,"activities":260,"authors":261,"images":262,"websites":263,"area":20,"programme":20,"language":20,"translations":264,"translation_of":20,"user_created":64,"date_created":265,"user_updated":266,"date_updated":267,"content":268,"link":269},9518,"We are grateful to the Principality of Liechtenstein for its decision to continue and substantially increase its [core contribution to our Green Corruption programme](https:\u002F\u002Fbaselgovernance.org\u002Fnews\u002Fbasel-institute-welcomes-liechtenstein-core-donor-green-corruption-programme).\n\nThe programme has gained significant momentum in 2021, responding to a clear need to address the “green corruption” that makes environmental crimes both possible and lucrative.\n\nIn the last year, the team has provided financial investigations support in dozens of environmental crime cases in East Africa and expanded the programme to new partner countries in Africa, Latin America and Southeast Asia. New [research](https:\u002F\u002Fbaselgovernance.org\u002Fpublications?topic=6&type=All&country=All&language=All&title=&external=1), as part of joint projects with our Public Governance team, is illuminating the links between environmental crime and corruption. The programme’s [Corrupting the Environment](https:\u002F\u002Fbaselgovernance.org\u002Fgreen-corruption\u002Fcorrupting-environment) webinar series with the OECD covered seven virtual dialogues on critical issues of corruption, illicit trade and the environment.\n\nLiechtenstein’s core funding has been and will continue to be exceptionally welcome in funding these and other activities, such as responding with agility to the growing number of requests from our global partners for expert advice. Commenting on the decision, Ambassador Martin Frick, Director, Office for Foreign Affairs of the Principality of Liechtenstein, said:\n\n> The Basel Institute’s Green Corruption programme matches many key priorities of our Multilateral Development Cooperation, such as strengthening the rule of law, combating corruption and international crime as well as protecting the environment.\n\nThe core funding is an essential complement to more targeted project-based financing from the UK and US governments. Gretta Fenner, the Basel Institute’s Managing Director, noted:\n\n> The continued support from our inaugural core donor Liechtenstein comes as the Green Corruption programme is undergoing a period of significant growth, opening up new presences in Peru, Bolivia and Indonesia. Liechtenstein's donation allows us to ensure that the growth is sustainable.\n\nIn 2022, we aim to further incubate promising programme ideas and finding innovative entry points to tackle areas rife with corruption that have tremendous environmental consequences but are commonly overlooked by traditional conservation programmes. Examples include waste trafficking, which generates USD 10–12 billion per year in illicit funds.\n\nIn this context, we will conduct a rigorous scan of high-corruption risk, high-potential environmental crime typologies that our unique skill set and context knowledge might be well placed to disrupt.","2022-04-12","liechtenstein-provides-vital-core-funding-to-our-green-corruption-programme-for-a-second-year-2206","Liechtenstein provides vital core funding to our Green Corruption programme for a second year","https:\u002F\u002Fjam.baselgovernance.org\u002Fapi\u002Fassets\u002F1a06e68a-8e00-4faa-8dfd-79c8aacba093?width=1000&height=650&format=webp&quality=80",[252],7265,[230],[255,256],"Partnerships","Media releases",[],2206,[230],[255,256],[],[],[22],[],"2022-05-26T22:51:53.000Z","dfef11db-1bc6-47e9-a61d-93443995484b","2026-05-08T21:10:59.000Z",[],"\u002Fresources\u002Fnews\u002Fliechtenstein-provides-vital-core-funding-to-our-green-corruption-programme-for-a-second-year-2206",{"left":271,"top":271,"width":272,"height":272,"rotate":271,"vFlip":273,"hFlip":273,"body":274},0,20,false,"\u003Cpath fill=\"currentColor\" fill-rule=\"evenodd\" d=\"M17 10a.75.75 0 0 1-.75.75H5.612l4.158 3.96a.75.75 0 1 1-1.04 1.08l-5.5-5.25a.75.75 0 0 1 0-1.08l5.5-5.25a.75.75 0 1 1 1.04 1.08L5.612 9.25H16.25A.75.75 0 0 1 17 10\" clip-rule=\"evenodd\"\u002F>",1780676464331]