Basel Institute on Governance (2024) ¦ Basel AML Index 2024 Launch and Panel Discussion

Basel AML Index 2024: Fraud, Effectiveness and the Push to Turn Analysis into Action

Introduction: what the 2024 launch revealed

The Basel AML Index 2024 public edition maps country-level risks for money laundering and related financial crimes, combining vulnerability and counter‑measure capacity across five domains and 17 indicators. The Index expanded coverage to 164 jurisdictions and introduced fraud data as a new input, reflecting the urgent need to capture the growing social and economic harm from fraud and its strong link to money laundering. Presenters and panellists used the launch to unpack methodology changes, regional patterns, gaps in effectiveness, lessons from grey‑listing and the practical value of country risk assessments for financial institutions.

Method and changes: what the Index measures now

The Basel AML Index is a composite tool designed to measure risk — not to quantify the amount of criminal proceeds. It balances jurisdictional vulnerabilities (corruption, financial secrecy, political and legal risks, transparency) with capacity to respond under AML/CFT frameworks. The Index is structured into five domains; the first domain (standards, predicate offenses and major crime indicators) carries 50% of the overall weight and includes data on FATF standards, mutual evaluation follow‑up, and specific predicate crimes (narcotics, trafficking, environmental crimes).

This year the Index added fraud indicators sourced from the Global Organized Crime Index (financial fraud and cyber‑dependent crime). The addition increased domain‑2 risk scores (corruption & bribery and related vulnerabilities) in many high‑income and major financial centre jurisdictions, while a significant share of other jurisdictions saw small decreases. The Index authors caution against simplistic year‑to‑year country comparisons because coverage and methodology evolve.

Bastian Schwind-Wagner_Follow "The Basel AML Index 2024 highlights the urgent need to integrate fraud into global AML assessment, strengthen effectiveness in investigations and asset recovery, and turn technical compliance into measurable reductions in financial crime. Coordinated international standards, improved data sharing and empowered public–private partnerships are essential to translate analysis into real impact."

Why include fraud: data limits and practical reasons

Fraud is included because its scale and its role as a predicate offence for money laundering cannot be ignored: online scams alone are estimated to cost the global economy about a trillion dollars. Practical barriers remain: there is no single global fraud dataset, definitions and collection practices differ widely between countries and sectors, under‑reporting is common, and cross‑border fraud makes risk allocation complex (where was the fraud committed, where are victims and perpetrators, and where did proceeds move?). The Index currently uses available organized‑crime indicators focused on where fraud is committed; it does not yet capture the response or prevention side at scale. The Basel Institute and stakeholders point to a need for global standards, better data sharing and stronger international cooperation to improve fraud measurement and responses.

Progress on standards but persistent weakness in effectiveness

The Index’s examination of FATF-related technical compliance over 2014–2024 shows some positive movement: technical compliance improved on average by roughly 12 percentage points, driven largely by lower‑performing countries improving, and with notable gains in Recommendation 22 (customer due diligence for designated non‑financial businesses and professions). However, effectiveness — the real‑world delivery of outcomes such as investigations, prosecutions, convictions and asset recovery — remains weak. The global average for effectiveness sits much lower than technical compliance, and within the asset recovery chain investigation/prosecution/sanctioning is the weakest link (around 20% in the analysis cited), while financial investigations score higher but still leave a large gap. The net position is that inherent criminal threats have risen faster than responses have improved, leaving meaningful residual risk.

Lessons from grey listing: incentives that produce reform

Grey listing often generates momentum. Several African jurisdictions that faced grey listing used the process as a catalyst for national coordination, law reform, greater private–public cooperation and public awareness. Examples include omnibus legal reforms and rapid improvements across multiple FATF recommendations, the creation of AML champions within government, and intensification of public debate that raises awareness of fraud and money‑laundering risks. Grey listing is politically costly and stigmatizing, but it can unlock resources and political will to fix long‑standing gaps.

Country risk assessments: why banks need them and how to use them

Country risk assessments translate macro‑level indicators into operational decisions. Banks must process huge transaction volumes and apply effort proportionally: risk‑based approaches let them focus supervisory and investigative resources where they matter most. A national or jurisdictional score is a valuable input — objective, structured and broadly comparable — but it is only one piece of a bank’s decision‑making. Institutions must combine country risk with customer behaviour, transaction patterns, products, channels and local knowledge. Country scores are an average: banks need judgment and calibration to distinguish a genuinely high‑risk relationship from a low‑risk customer who happens to have a connection to a higher‑risk jurisdiction. The Index helps prioritise attention but does not replace tailored risk analysis.

Where the community should focus next

Panellists converged on several priorities to strengthen global responses:

• Build better international frameworks and cooperation for fraud: fraud’s scope and cross‑border nature demand clearer global standards and instruments that capture organized and large‑scale fraud, cyber‑enabled scams and identity‑based abuse, while improving data comparability and information sharing.
• Close the effectiveness gap: the measures that demonstrate technical compliance are necessary but insufficient; countries need to turn laws, regulations and reporting into tangible law‑enforcement results, prosecutions and asset recovery to reduce harm and deliver deterrence.
• Improve public–private partnerships and data use: targeted, empowered collaboration between private sector firms, FIUs and law enforcement, supported by data analytics and responsible AI, can make suspicious activity reporting more effective rather than simply more voluminous.
• Clarify and operationalise the risk‑based approach: that approach must be practical and nuanced, letting institutions apply proportional controls to individual customers and transactions so resources concentrate on real threats rather than overburdening low‑risk activity.

• Use enforcement levers that increase asset recovery: non‑conviction based forfeiture and strengthened international cooperation on asset recovery were highlighted as promising ways to turn disruption into tangible outcomes.

• What gives experts hope Speakers identified concrete reasons to be cautiously optimistic: improved technical compliance in some jurisdictions; the design of the next FATF evaluation round with a stronger emphasis on effectiveness; successful examples of reform triggered by grey listing; growing use of public–private partnerships and advanced analytics; and legal reforms (including the FATF emphasis on asset recovery tools) that can improve deterrence and outcomes. Yet they emphasized that hope must be backed by concrete strategy and sustained coordination — standards, resources, capacity building, data infrastructure and legal tools — to move from better reports and ratings to demonstrable reductions in crime and recovered proceeds.

Conclusion: from measurement to impact

The Basel AML Index 2024 launch underscored three linked realities:

• global risks are rising (notably through fraud and cyber‑enabled offending);
• measurement is improving but data gaps and definitional divergence constrain what we can assess; and
• translating standards into concrete effectiveness — prosecutions, asset recovery and deterrence — remains the sector’s central challenge.

The Index plays a critical role by identifying vulnerabilities and tracking change, but the community needs coordinated international instruments for fraud, smarter and calibrated risk‑based application, stronger public–private cooperation and targeted capacity support to close the effectiveness gap. The task is to convert analysis into sustained action that reduces real harm and recovers illicit proceeds — not merely to improve scores but to increase real‑world impact.