Abstract
The Anti-Money Laundering regime has been important in harmonizing laws and institutions, and has received global political support. Yet there has been minimal effort at evaluation of how well any AML intervention does in achieving its goals. There are no credible estimates either of the total amount laundered (globally or nationally) nor of most of the specific serious harms that AML aims to avert. Consequently, reduction of these is not a plausible outcome measure. There have been few efforts by country evaluators in the FATF Mutual Evaluation Reports (MERs) to acquire qualitative data or seriously analyze either quantitative or qualitative data. We find that data are relatively unimportant in policy development and implementation. Moreover, the long gaps of about 8 years between evaluations mean that widely used ‘country risk’ models for AML are forced still to rely largely on the 3rd Round evaluations whose use of data was minimal and inconsistent. While the 4th round MERs (2014–2022) have made an effort to be more systematic in the collection and analysis of data, FATF has still not established procedures that provide sufficiently informative evaluations. Our analysis of five recent National Risk Assessments (a major component of the new evaluations) in major countries shows little use of data, though the UK is notably better than the others. In the absence of more consistent and systematic data analysis, claims that countries have less or more effective systems will be open to allegations of ad hoc, impressionistic or politicized judgments. This reduces their perceived legitimacy, though this does not mean that the AML efforts and the evaluation processes themselves have no effects.
Highlights
In the mid-1980s first the US and the UK criminalized drugs money laundering
We examine only the AML efforts, not those related to terrorism finance, because we have so little access to the data used to make judgments about the adequacy of existing control efforts
A required component of the 4th round Mutual Evaluations is the preparation by each country of a National Risk Assessment (NRA), to be conducted before the Financial Action Task Force (FATF)/FATF-Style Regional Bodies (FSRBs) evaluation team arrives to collect data in-country; such an assessment does not have to be published
Summary
In the mid-1980s first the US and the UK criminalized drugs money laundering. Since the world has witnessed an extraordinary growth in legislative and institutional efforts to establish processes to properly identify financial services customers, to require private sector institutions to report suspicions of their customers, and to freeze and confiscate the proceeds of crime nationally and transnationally. The release of the BPanama Papers^ in May 2016 [5] led to yet more calls from political figures such as the British Prime Minister (David Cameron) for further efforts to prevent what was seen as money laundering for purposes of tax evasion and Grand Corruption It was the range and scale of celebrity examples rather than data per se that drove the media attention and the scandals; the size of the Russian cellist’s offshore account juxtaposed with his close friendship with President Putin attracted particular attention (outside Russia), but the reverberations for politicians in many countries (e.g. Iceland and Pakistan) were significant.
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