Estonia Emerges as Global Leader in Financial Crimes
New Report Reveals Surprising Findings on Country’s Vulnerability to Money Laundering
A recent report by the Basel AML Index has crowned Estonia the global leader in financial crimes, but experts warn that this title may be short-lived due to concerns over the country’s effectiveness in preventing money laundering.
What is the Basel AML Index?
The Basel AML Index is a comprehensive assessment of a country’s risk of money laundering and terrorist financing. It evaluates 125 countries based on their technical compliance, effectiveness, and adherence to anti-money laundering regulations.
How did Estonia score?
Estonia scored 2.68 out of 10 in the Basel AML Index, indicating a relatively high level of vulnerability to financial crimes. The country’s ranking is particularly striking given its involvement in a major money laundering scandal involving Danske Bank.
What are the concerns surrounding Estonia’s ranking?
Experts warn that Estonia’s high score may worsen when it is reassessed using the latest methodology from the Financial Action Task Force (FATF). FATF has criticized Estonia for its lack of effectiveness in preventing money laundering, citing concerns over its geographic proximity to Russia and the potential for Russian money launderers to use the country as a gateway to Europe.
The Gap between Technical Compliance and Effectiveness
The Basel AML Index highlights the gap between technical compliance and effectiveness in countries’ anti-money laundering systems. For instance:
- Vanuatu scored highly on technical compliance but zero percent on effectiveness.
- Countries with high scores were often those that had not yet been reviewed by FATF using the latest methodology, suggesting that they may be due for a significant downward revision in their rankings.
The Consequences of Poor Anti-Money Laundering Systems
Countries with low scores, such as Mozambique, Laos, Myanmar, Afghanistan, and Liberia, face significant challenges in preventing money laundering and terrorist financing. These countries often lack effective anti-money laundering systems and struggle to enforce laws related to financial crimes.
The Importance of Combating Financial Crime
The Basel AML Index serves as a warning that even countries with high scores can face significant challenges in preventing financial crimes. Governments must remain vigilant in addressing these issues to maintain a trustworthy reputation and prevent dirty money from flowing through loopholes.
Quote from Gretta Fenner, Managing Director of the Basel Institute on Governance
“Governments who are really serious about combating financial crime should get in the driver’s seat and start fixing the weaknesses that FATF assessments reveal.”