Basel Institute on Governance ¦ Basel AML Index 2025 – Trends in Global Financial Crime Risk and Assessment

Basel AML Index 2025: A More Nuanced Map of Global Financial‑Crime Risk – Progress, Persistent Gaps, and the Challenge of Virtual Assets

The Basel AML Index 2025 refines how we see and use jurisdictional risk for money laundering and related financial crimes. The Basel Institute on Governance continues to treat measurement as the essential first step to change: clear definitions and rigorous indicators expose drivers of risk, provide diagnostics for policy and operational responses, and create benchmarks that let governments and firms track progress. The 2025 edition remains a research‑based composite ranking of country risk built from 17 indicators grouped into five domains:

1. quality of the AML/CFT framework;
2. corruption, bribery and fraud;
3. financial transparency and standards;
4. public transparency and accountability; and
5. political rights and rule of law.

Scores range from 0 (lowest risk) to 10 (highest risk). The expert edition extends the public findings with FATF data, more jurisdictions, and regular updates useful to practitioners and policymakers.

Headline results: slight global improvement, divergent regional dynamics

On average, the global Basel AML Index score improved modestly in 2025 from 5.30 to 5.28, but that aggregate hides important regional divergence. Sub‑Saharan Africa stands out: roughly 70% of jurisdictions in the region registered significant improvement, six countries exited the FATF grey list in the period, seven of the top ten global improvers were from the region, and two countries moved from higher‑ to medium‑risk categories. Other regions showed mixed movements: small overall improvements were recorded in South Asia, East Asia & Pacific, and Latin America & the Caribbean, while risk increased in North America, Western Europe, Eastern Europe & Central Asia, and the Middle East.

These patterns describe a slow drift toward the middle: some higher‑risk jurisdictions are improving, but their gains are frequently offset by deteriorations among historically stronger performers. The overall picture is thus one of partial progress, rebalancing, and persistent vulnerabilities rather than rapid global improvement.

Domain trends: where risk moved in 2025

The index’s five domains evolved unevenly in 2025. The quality of AML/CFT frameworks improved slightly (average risk from 5.58 to 5.50). Corruption risk edged down modestly (5.12 to 5.09). By contrast, financial transparency and standards worsened (risk from 5.42 to 5.47), and risks tied to public transparency and accountability rose markedly (from 4.23 to 4.35). Political and legal risks were essentially unchanged, with a tiny uptick (4.45 to 4.46). These movements underline that regulatory improvements alone are insufficient if public accountability, transparency and financial-sector integrity are weakening or not keeping pace.

Methodology refinements: moving beyond blunt bands

A notable methodological change in 2025 is the shift from equally spaced risk bands to a natural‑breaks (Jenks) classification. That adjustment produces more nuanced, data‑sensitive categories and renames them “lower”, “medium”, and “higher” risk to emphasize relativity. The change aligns better with the index’s intent: provide actionable information that maps onto the varying levels of risk institutions and supervisors must manage, rather than forcing jurisdictions into artificial buckets.

Bastian Schwind-Wagner _Follow

"The Basel AML Index 2025 shows modest global improvement but highlights unequal progress across regions and persistent weaknesses in financial transparency and public accountability. Its methodological updates and focus on operationalizing lower‑risk treatment give practitioners a better tool to allocate resources proportionately.

To translate measurement into impact, jurisdictions must close data gaps (especially for virtual assets), strengthen enforcement and gatekeeping, and provide clear supervisory guidance on simplified measures. The index provides a transparent diagnostic – the next step is coordinated action by regulators, supervisors and reporting entities."

Risk‑based approach: emphasis on the missing “lower risk” story

This year’s thematic focus on the risk‑based approach (RBA) highlights a recurring blind spot: the field has overemphasized identifying high‑risk clients, products, services, and jurisdictions and underemphasized rigorous identification and treatment of lower‑risk situations. Simplified and proportionate measures for lower risk are central to effective AML/CFT practice because they allow resources to be concentrated where they matter most. Yet supervisors and reporting entities frequently lack clear guidance on what truly qualifies as lower risk, and many fail to implement simplified measures in a consistent, evidence‑based way. The FATF’s push for proportionality is now being amplified across guidance and supervisory practice, and the index’s more granular classification supports this shift.

Virtual assets: structural vulnerabilities, data gaps, and supervisory limits

The Basel AML Index 2025 flags virtual assets as a particularly difficult area for national risk assessment. Virtual assets are inherently cross‑border and often operate outside traditional regulatory regimes; reliable national‑level data are scarce, and commercial blockchain analytics only partially fill the gaps. The report stresses an important point: virtual asset activity typically exploits the same underlying structural weaknesses – weak AML/CFT frameworks, poor transparency, corruption, and lack of public accountability – that enable traditional financial‑system abuse. Thus, virtual assets magnify existing vulnerabilities rather than create wholly new, isolated risks.

Practitioners’ perspectives: what experts and users said

Speakers and panelists at the launch underscored the index’s practical value. Financial institutions’ country‑risk teams and supervisors view the Basel AML Index as an objective anchor and an efficiency multiplier: it provides transparent, comparable inputs that help calibrate due diligence, model false‑positive tolerance, and prioritize resources across jurisdictions. Supervisors noted the index complements FATF assessments by filling gaps on corruption, public accountability and financial‑transparency indicators that are material for institutions whose risk exposure hinges on those dimensions.

Central bank and supervisory voices emphasized the paradox of blockchain “transparency”. While public ledgers are visible, real‑world attribution is often weak because wallets are pseudonymous, many transactions occur off‑chain (internal ledgers of large providers), and privacy tools, mixers, cross‑chain bridges and unhosted wallets obscure ownership and flows. Regulatory fragmentation and uneven supervisory cooperation compound the problem: some providers are outside the reach of jurisdictions that need their data, and grandfathering arrangements or patchy licensing lead to blind spots. Stablecoins and multi‑jurisdiction issuance structures introduce additional cross‑border complexity for both AML/CFT and financial‑stability oversight.

What this means for institutions and jurisdictions

For private‑sector firms, the Basel AML Index should be used as a standalone input or a benchmarking tool to complement internal risk frameworks. It helps firms identify structural vulnerabilities in jurisdictions where they operate and calibrate monitoring, KYC, transaction surveillance and escalation thresholds in line with local risks.

For public authorities, the index is a diagnostic that highlights where legal frameworks, financial‑sector transparency, public accountability and anti‑corruption efforts must be strengthened. It is especially useful for jurisdictions preparing for FATF mutual evaluations or seeking to avoid grey‑listing, because the expert edition provides granular FATF data and indicator‑level trends.

Policy implications and priorities

• Strengthen the missing piece: policymakers and supervisors must explicitly define and operationalize “lower risk” to enable proportionate, simplified measures. Clear supervisory guidance on simplified due diligence, with concrete examples and evidentiary thresholds, will reduce defensive reporting and free resources for higher‑risk scrutiny.
• Close data and cooperation gaps for virtual assets: national risk assessments require better access to reliable, attributable data. That means stronger licensing and reporting requirements for virtual‑asset service providers (VASPs), addressing grandfathering loopholes, and accelerating cross‑border supervisory cooperation and mutual legal‑assistance mechanisms.
• Focus on implementation and enforcement, not just rulemaking: improving technical compliance without parallel investment in supervisory capacity and enforcement will leave gaps exploitable by illicit actors. Regulators should prioritize robust gatekeeping at market entry, stronger fit‑and‑proper checks for owners and managers, and active enforcement against entities that exploit regulatory arbitrage.
• Use risk‑sensitive tools to allocate resources: both public and private actors must reallocate existing resources to focus on the biggest sources of risk. This is about prioritization and redeployment, not necessarily more funding. The index’s more nuanced classification supports better calibration of surveillance thresholds, transaction monitoring models, and supervisory focus.

Conclusion

The Basel AML Index 2025 advances the international conversation by refining how we measure and categorize country risk and by spotlighting two linked imperatives: the need to make the risk‑based approach operationally meaningful (including specifying lower risk and proportionate measures) and the necessity of closing data and cooperation gaps around virtual assets. Progress in many jurisdictions – notably in sub‑Saharan Africa – is encouraging, but improvements are fragile and often offset by backsliding in other parts of the world. Practical change will require clearer supervisory guidance, better cross‑border cooperation, disciplined enforcement, and the strategic redeployment of resources to where they will have the greatest impact. The Basel AML Index remains a practical, transparent tool for that work; the challenge now is to translate its diagnostics into sustained, coordinated action.

Acknowledgement

This summary draws on the Basel Institute on Governance presentation, which features the presenters.