Malta in Basel index’s top 20 least risky financial jurisdictions

Malta has ranked ahead of neighbouring European finance jurisdictions on the risk of money laundering and terrorist financing in the latest edition of the Basel AML index.

Malta was placed in 118th position out of 129 countries ahead of France in 113th position, United Kingdom in 106th position, Germany in 102nd position and Italy in 77th position.

The index is issued by the International Centre for Asset Recovery, part of the Basel Institute on Governance.

Malta has been under international scrutiny in the press over scandals concerning banks like Pilatus and Nemea, the Panama Papers, and its administration’s commitment to good governance and the role of its financial intelligence analysis unit.

FinanceMalta chairman Kenneth Farrugia said the result was a reflection of Malta’s robust regulatory and legislative framework, “as well as its commitment to the international standards of transparency and effective exchange information through a broad network of EOI instruments.”

FinanceMalta is a lobby for financial services practitioners.

“The country’s high regulatory standards are modelled on EU legislation and best practice, whilst at the same time allowing for the flexibility necessary in a modern and dynamic environment, without imposing undue bureaucratic burdens on operators,” Farrugia said.

The Basel AML Index is an independent annual ranking that assesses the risk of money laundering and terrorist financing around the world. It focuses on anti-money laundering and countering the financing of terrorism (AML/CFT) frameworks, plus related factors that impact the risk of ML/TF, such as corruption, transparency and the rule of law.

The countries which are most at risk among the 129 countries ranked are Tajikistan, Mozambique and Afghanistan, while Malta sits on the other side of the scale, in 118th place followed by Montenegro, Israel, Croatia and Sweden where the risks are considered lowest.

Over the seven years since it was first calculated, the Basel AML Index has consistently indicated slow progress among most countries in improving their ML/TF risk scores. 64% of countries in the 2018 ranking (83/129) have a risk score of 5.0 or above and can be loosely classified as having a significant risk of money laundering and terrorist financing. The average level of risk remains above this score (5.63 in 2018).

Less than 4% of countries in the ranking (4/129) have improved their scores by 1 point or more in the last year (Ghana, Bolivia, Tanzania, Trinidad and Tobago), while between 2012 and 2018, only 17% (21/129) improved their score by 1 point or more.

The downward trend is more striking; 42% of countries have worsened their risk scores between 2017 and 2018. Almost 37% of countries now have a worse risk score than they did in 2012. The highest risk score has also remained roughly the same, fluctuating between 8.55 and 8.6 between 2012 and 2018. Clearly, still too little is being done to effectively counter ML/TF risks.

The Basel Institute on Governance is an independent centre that specialises in corruption prevention and the recovery of stolen assets that is housed at the University of Basel and regularly works with the World Bank, the UN, and the Egmont Group.