Financial Crime World

Estonia Crowned Global Champ in Financial Crimes, But Does It Deserve Its Top Spot?

The Controversial Ranking

According to a recent report by the Basel AML Index, Estonia has been ranked as the global leader in perceived financial crime proclivities. With an overall risk score of 2.68 out of 10, it is considered the most vulnerable to money laundering and terrorist financing among 125 countries evaluated.

The Context

The ranking comes amidst a major money laundering scandal involving Denmark’s largest bank, Danske Bank. The bank has been embroiled in controversy surrounding suspicious payments worth hundreds of billions of dollars through its Estonian branch between 2007 and 2015. This development has led to the resignation of the bank’s former CEO and a significant decline in its share price.

Despite Estonia’s dubious distinction, many countries have made incremental improvements to their anti-money laundering and counter-terrorism financing (AML/CFT) regimes. However, the report notes that there has been no substantial progress in tackling money laundering and terrorist financing risks globally. Nearly 30 percent of countries have higher ratings than they did in 2018, but this improvement is largely driven by a greater emphasis on effectiveness.

The Index

The Basel AML Index measures a country’s risk of money laundering and terrorist financing using data from publicly available sources such as the Financial Action Task Force (FATF), Transparency International, the World Bank, and the World Economic Forum. The index aggregates 15 indicators related to anti-money laundering regulations, levels of corruption, financial standards, political disclosure, and the rule of law into an overall risk score.

Countries That Fared Well

Other countries that performed well in the report include:

  • Finland
  • Lithuania
  • New Zealand
  • Macedonia

Countries That Struggled

On the other hand, Mozambique, Laos, Myanmar, Afghanistan, and Liberia were ranked among the worst offenders. The report highlights the need for governments to take a proactive approach to combating financial crimes and warns against complacency.

Expert Insights

“The most concerning aspect of this year’s report is that countries aren’t enforcing the laws they have on the books to fight money laundering,” said 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.”

Conclusion

Estonia’s ranking as the global leader in perceived financial crime proclivities raises important questions about its commitment to combatting money laundering and terrorist financing. As the country prepares for a review by the Financial Action Task Force (FATF) later this year, it is crucial that it addresses the weaknesses highlighted in the report and takes concrete steps to improve its AML/CFT regime.