Now in its fifth year, the annual Basel ALM Index covers 149 countries and ranks them according to how effectively they implement and enforce anti-money laundering laws and standards. This year, Iran has once again been ranked as the country with the highest risk of money laundering activity, marking the third year it has taken the title. Also scoring spots in the Index’s top ten riskiest countries are Afghanistan, Tajikistan, Guinea-Bissau, Mali, Cambodia, Mozambique, Uganda, Swaziland and Cambodia. Meanwhile, Finland was crowned as the world’s least risky market for money laundering, joined by Lithuania and Estonia at the bottom of the Index.

Modest improvement

While the Basel Institute report concludes that ‘a majority of countries legally comply with ALM/counter terrorism funding (CTF) standards’ many are still falling short in terms of implementation and enforcement. Several countries including Kuwait, Ecuador and Albania significantly decreased their risk scores in this year’s Index compared with last year. However, others including Vanuatu, Chile, Sri Lanka, China and Turkey have seen their ALM enforcement deteriorate over the last 12 months and their Index score climb significantly upwards.

Easing sanctions

Iran’s ranking is a blow at a time when the country is trying to attract fresh foreign investment amid the slow easing of economic sanctions against the country. A Joint Comprehensive Plan of Action (JCPOA) signed between Iran and major global powers last year negotiated dialing down global economic sanctions against Iran in exchange for the country placing a freeze on its nuclear program, coming into effect officially in January this year. Last month, global money laundering watchdog the Financial Action Task Force (FATF) decided to suspend sanctions and financial countermeasures against Iran but only for a one-year trial period, rather than completely removing the country from its high-risk list.

Sources: Wall Street Journal; The Tower