Mutual Evaluation Reports Research Articles

An analysis of the 2021 South African FATF mutual evaluation report: terrorist financing and NPOs

PurposeIn the aftermath of the 2021 Financial Action Task Force Mutual Evaluation Report, legislators, supervisory bodies, law enforcement and the like are focusing on preventing South Africa from being greylisted. This paper performs an analysis of the 2021 South African Financial Action Task Force (FATF) Mutual Evaluation, specifically Recommendation 8 and Immediate Outcome 10. The purpose of this paper is to address the concerns raised and assist those tasked with implementing remediation measures.Design/methodology/approachSecondary sources such as legislation, case law, textbooks and peer-reviewed publications are used in addressing the concerns. A major focus is placed on the evaluation itself, with an analysis of Recommendation 8 and Immediate Outcome 10.FindingsDespite the non-compliance rating and a low level of effectiveness received regarding non-profit organisations, authorities might not place a large focus on remediating this, as more pertinent issues arise in the report. The lack of focus in this area adds to the likelihood of grey listing by FATF. However, with co-operation from the relevant stakeholders, these low ratings can be improved.Originality/valueSince the Mutual Evaluation’s release in October 2021 there have not been any papers addressing the highlighted issues in the non-profit sector in South Africa, to the best of the authors’ knowledge. This paper will be the first of its kind and will be of use to authorities as regards mitigating the concerns raised by FATF.

The South African non-profit sector and its vulnerabilities to economic crime

PurposeIn a post-pandemic society, non-profit organisations (NPOs) have become vital. A safe environment for such organisations to function in is therefore important. In spite of efforts to safeguard this sector, rampant abuse exists. This paper aims to provide an in-depth analysis of the South African non-profit sector and its vulnerabilities to economic crime, specifically money laundering and terrorist financing.Design/methodology/approachSecondary sources such as legislation, case law, textbooks and peer-reviewed publications are used in identifying the vulnerabilities in the South African non-profit sector. Common denominators are identified from these sources to provide a basis for the highlighted vulnerabilities.FindingsThe South African non-profit sector is most vulnerable, leaving the sector susceptible to economic crimes. This is highlighted in the 2021 Financial Action Task Force Mutual Evaluation Report. Governance structures in the sector cannot protect it effectively and concomitant regulations have become inadequate. It is necessary for the South African Government and Parliament to review existing laws and regulations to ensure enhanced governance over these NPOs.Originality/valueThis paper contributes to a research gap on existing vulnerabilities within the South African non-profit sector relating to money laundering and terrorist financing. The paper provides a comprehensive layout of the South African non-profit sector, highlighting areas at risk of exploitation and identifying key vulnerabilities within the sector.

Machine learning approaches for constructing the national anti-money laundering index

This paper proposes a methodology for constructing the national anti-money laundering (AML) index based on Mutual Evaluation reports and machine learning models. We employ LASSO and random forests to jointly identify the key factors affecting AML, which have policy implications for regulatory authorities to optimize the allocation of AML resources. The random forests five-factor (RF-FF) model proposed in this paper has high prediction accuracy (86.31%) and good out-of-sample predictive ability for the MER-AML index, which is significantly better than competing models such as OLS and relaxed LASSO. The time-series national AML index constructed based on the RF-FF model contributes to overcoming the limitations of existing methods, providing fresh perspectives on the measurement of AML systems, and facilitating empirical studies related to evaluating the controversial AML regime.

The money laundering typologies and the applicability of placement-layering-integration model in undocumented South Asian economies: a case of Pakistan

PurposeThis study aims to determine the applicability of the placement-layering-integration model of money laundering (ML) in the South Asian context with emphasis on Pakistan by analysing different ML typologies.Design/methodology/approachThis study applied content analysis in the first step. It explored three primary documents concerning ML typologies: Asia Pacific Group’s yearly reports on ML typologies from 2010 to 2021, the mutual evaluation reports and the National Risk Assessment of Pakistan. In the second step, expert interviews were recorded, and NVivo was used for data management and analysis.FindingsThis study found primary predicate offences: corruption, tax crimes, smuggling and drug and human trafficking. Pakistani launderers often use traditional typologies, including cash smuggling, round-tripping, multiple bank accounts, investment in real estate (in Pakistan and Dubai) and hawala. However, cybercrimes, cyber laundering and trade-based ML are rising. The politically exposed persons are involved in most of the laundering cases.Originality/valueRare studies specifically address the south Asian typologies and the limitations of the placement, layering and integration model. Therefore, there is a need to understand the current typologies used in developing, less regulated and undocumented jurisdictions like Pakistan.

Evaluations on the Current Amendments in the Turkish Commercial Code Regarding Bearer Shares Within the Framework of Recommendation 24 of Financial Action Task Force (FATF)

Turkey is one of the Financial Action Task Force (FATF) member countries and has been evaluated from various perspectives in line with its Recommendations. The 24th Recommendation in force as of 2022 is related to transparency and beneficial ownership of legal persons. In this recommendation, it is stated that countries should prevent bearer shares from being used for money laundering and terrorist financing. In the Mutual Evaluation Report (MER) (https://www.fatf gafi.org/media/fatf/documents/reports/mer4/Mutual-Evaluation-Report-Turkey-2019.pdf, page 205 (accessed 20 April 2022)) of 2019, Turkey has been criticized that bearer shares are suitable for use for terrorist financing and money laundering. In order to eliminate these criticisms and to prevent the use of bearer shares for terrorist financing and money laundering, Turkey has made some changes in the Turkish Commercial Code (TCC) with Code No. 7262 on 31 December 2020, to be entered into force as of 1 April 2021. In this article, first of all, the situation before these changes in Turkish law will be explained, and then information will be given about these amendments. Finally, considering the last report of FATF on Turkey dated 2021, the current situation regarding bearer shares will be discussed. bearer shares, beneficial ownership

Asset recovery practices in combating money laundering: evidence from FATF mutual evaluation report of FATF member countries of Asia pacific region

PurposeThis study aims to understand the member countries’ current asset recovery mechanism based on two elements, namely, confiscation policy and asset recovery management framework.Design/methodology/approachContent analysis was performed on the Financial Action Task Force (FATF) Mutual Evaluation Report (MER) of eight countries.FindingsThe result showed that only a few countries established a centralised asset recovery centre or special task force to manage recovered assets.Research limitations/implicationsThis study is limited to information mentioned in the FATF MER.Practical implicationsThis study highlights the need to have a centralised asset recovery management centre as an initiative to improve the outcome of money laundering investigations. The study findings will benefit regulators to understand further the practical challenges of the asset recovery mechanism for future improvement.Originality/valueFATF recommends that each country establish a centralised asset recovery centre and work closely with the investigating officers and prosecutors in deciding on assets confiscation. However, the implementation is contingent on their local environment and resources at the member countries’ discretion. Therefore, this study aimed to understand the member countries’ current asset recovery mechanism based on two elements, namely confiscation policy and asset recovery management framework.

Mutual Evaluation Report: comparative analysis of Cape Verde and Senegal in relation to the role of the financial action group (FAFT) in leading measures to combat money laundering and terrorist financing

This article aimed to define the Financial Action Task Force (FATF) and its Style Regional Bodies (FSRBs) that combat money laundering and terrorist financing in the specific case of Cape Verde and Senegal with FATF`s recommendations with respect to the regulation and supervision. Therefore, a comparative analysis methodology with a descriptive-analytical approach was developed to compare two member countries of the Intergovernmental Action Group Against Money Laundering in West Africa (GIABA). In data collection, secondary data sources were used: theoretical literature on the subject and FATF report on Mutual Assessment Reports (RAM). This study analyzed variations in compliance with FATF standards between two GIABA member countries: Cape Verde and Senegal. It turned out that although Senegal has almost entirely extended these standards, Cape Verde only partially fulfilled them. These compliance variations are mainly attributed to the varying level of readiness in countries' commitment to legislative and regulatory requirements before the mutual evaluation process. This study makes a unique and vital contribution as it demonstrates the effectiveness of applying the FATF standards for these two GIABA member countries.

The anti‐money laundering and counter financing of terrorism policy in Pakistan: Is it truly combating or just a high‐level desk work bureaucracy?

To combat money laundering (ML)/terrorist financing (TF), Pakistan has joined the Asia Pacific Group in May 2000. Pakistan has ratified and adopted twenty United Nations conventions and resolutions on organized and related crimes. However, these efforts were futile due to deficient legislation and insubstantial implementation caused by a lack of political commitment and will. Although a multi‐agency approach for investigation and enforcement is in place to fight against ML/TF, the geographical location and variety of Pakistan's borders are natural obstacles in implementing a sustainable anti‐money laundering (AML)/counter financing of terrorism regime. Further, the mutual evaluation report stated that Anti‐money Laundering Act (AMLA) 2010's development demonstrates many inconsistencies and deficiencies, resulting in a feeble AML regime. FTAF has endorsed flaws in AMLA and related laws pointed by APG. Pakistan has convicted only one launderer on the implementation front, and assets confiscation is also negligible under AMLA. Moreover, without clarity and harmonization in AMLA, Pakistan finds it difficult to secure a stable position in financial action task force (FATF).

A difficult balancing act: the Samoan experience with money laundering regulation

PurposeThis paper aims to examines the trade-offs that Small Island Developing States (SIDS) must make in navigating an inappropriate elite-driven global anti-money laundering anti-money laundering/countering the financing of terrorism (AML-CFT) order. This paper examines the case of Samoa, an under-researched Pacific Island nation. It is hoped that this paper will have a wider resonance for policymakers from other developing nations facing similar challenges.Design/methodology/approachIt draws on the latest Samoan domestic source material and Asia/Pacific Group on Money Laundering Mutual Evaluation Reports to highlight the difficult balancing act that SIDS face in complying with complex global norms within their limited regulatory capacity and competing development priorities of financial inclusion and affordable remittance flows.FindingsSamoa and other SIDS in balancing the existential risks of “blacklisting” with the significant regulatory opportunity costs of compliance undertake an expensive form of AML-CFT window-dressing. Policymakers need to be more sensitive to the needs and regulatory opportunity costs of small jurisdictions, particularly when questions about the effectiveness of the AML-CFT remain open.Research limitations/implicationsThe author notes Samoa’s offshore center’s role in raising its risk profile. However, owing to this paper's limited scope offshore center (OFCs) will not be explored in depth. Further research is needed in this area.Originality/valueThere is a dearth of contemporary academic research into AML-CFT regulation in the South Pacific and Samoa specifically. This paper presents through its Samoan case study insights into the cost-benefit calculations that small jurisdictions must make in seeking to comply with elite global AML-CFT norms vis-à-vis competing policy goals such as financial inclusion and ready access to remittance flows.

Refocusing designated non-financial businesses and professions on the path of anti-money laundering and combating the financing of terrorism compliance

Purpose Designated non-financial businesses and professions (DNFBPs) are important actors both in the formal and informal sectors owing to the nature of services they offer. The DNFBPs are key players in financial and economic development and thus are highly vulnerable to money laundering (ML) and terrorist financing (TF) risks. Globally, and indeed, within the West African region, typologies studies have indicated several instances of misuse of DNFBPs for the laundering of proceeds of crime and to a lesser extent, TF. Factors that make DNFBPs vulnerable to ML and TF in the region, include limited understanding of ML/TF risk and anti-money laundering and combating the financing of terrorism (AML/CFT) obligations, and poor implementation of AML/CFT measures by the sector. As reporting institutions, DNFBPs are required to implement appropriate measures to mitigate the ML/TF risk facing them. Mutual evaluation reports (MERs) of countries in the region noted weak implementation of AML/CFT measures by DNFBPs compares to financial institutions. These coupled with the general poor monitoring and supervision of DNFBPs for compliance, make them a weak link in member states’ AML/CFT regime. This study examined how Economic Community of West African States member states can plug the loopholes in the DNFBPs to strengthen their AML/CFT regime and thus improve their performance during mutual evaluation. This study reviewed data from the publications of Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), Financial Action Task Force (FATF) and other credible sources. Design/methodology/approach This study is more of desk-review based on secondary data, including information obtained from GIABA, and FATF publications, and websites as well as information obtained from reliable sources on the internet. The authors reviewed the MERs of GIABA member states that have been assessed under the second round, especially that of Ghana, Senegal, Cape Verde, Mali and Burkina Faso, with particular focus on sections of the reports relating to preventive measures and supervision. In general, this paper adopts a policy approach with a view to explaining the importance and benefits of implementing AML/CFT preventive measures by reporting entities, especially the DNFBPs. Findings This study found that there is a general lack of information on the exact size of DNFBPs across member states, the risk of ML/TF associated with DNFBPs is generally identified as high across member states (albeit at different levels), the extent and level of monitoring/supervision of DNFBPs for AML/CFT compliance trails what is obtainable in financial institutions; the institutional and operational frameworks for regulating, supervising and monitoring DNFBPs are either weak or poorly defined in many member states; and the focus of AML/CFT technical assistance has been more on financial institutions than DNFBPs. Although the number of MERs reviewed for this work may be few, the findings and conclusions in the concluded MERs reflect regional peculiarities, including high informality of the economies, preponderance use of cash in transactions, diversity of DNFBPs and the general weak application of AML/CFT preventive measures by these entities, and the weak AML/CFT supervision or monitoring of DNFBPs which cut across all GIABA member states. Although efforts to address the weaknesses in the DNFBPs, including training and supervision, have commenced, in most member states, these are still at rudimentary levels. Research limitations/implications However, this study is limited by the fact that it was desk-based review without direct inputs of industry players (DNFBPs and their supervisors). Practical implications In general, this paper adopts a policy approach with a view to explaining the importance and benefits of implementing AML/CFT preventive measures by reporting entities, especially the DNFBPs. It aims to bring to the fore the weaknesses of the DNFBPs in the implementation of AML/CFT preventive measures and therefore will be useful to national authorities who are striving toward strengthening their national AML/CT regimes and to DNFBPs who wish to protect the integrity and stability of their system. Originality/value It is imperative to mention that the weak compliance by DNFBPs, and indeed other challenges inhibiting effective implementation of preventive measures, is not peculiar to West Africa. A review of MERs of 17 African countries (eight countries in the Eastern and Southern Africa Anti Money Laundering Group region, five in GIABA region and three in the Middle East and North Africa region assessed under the current round as on October 2020, show a similar pattern of weak ratings under Immediate Outcome 4.

Is there a commendable regime for combatting money laundering in international business transactions?

Purpose Money laundering and grand business corruption continue to plague the global economy, accounting for 2%-5% of the global gross domestic product. Illicit funds, produced through grand corruption, are laundered using complex layering schemes that cloak them in legitimacy by concealing their origins. Lamentably, weak anti-money laundering (AML) frameworks promote economic instability, unjust commercial advantages and organized crimes. This study aims to highlight the need for comprehensive anti-corruption and AML frameworks by critiquing the exploitable gaps in the global AML regime created by heterogeneous state-level AML regimes to date. Design/methodology/approach This study welcomes the United Nations Convention against Corruption (UNCAC) and the financial action task force (FATF) recommendations but underscores the limitations of their effectiveness by investigating state-level enforcement mechanisms to determine these instruments’ true impact or lack thereof. The mutual evaluation reports (MERs) and state-level AML regimes in the UK, the USA and Canada are analyzed to illustrate the distinct implementation of international soft law in domestic legislation. Findings This study finds that UNCAC and the FATF recommendations are pivotal steps towards the establishment of a global AML regime for international business, albeit, one that remains imperfect because of the inconsistency of state-level AML frameworks. Consequently, international cooperation is needed to navigate and improve the discrepancies in varied AML legislation. Originality/value The author provides an in-depth and balanced analysis of current state-level AML developments and relies upon the recent 2016-2018 MERs to indicate the successes and flaws of various AML legislation. Therefore, this critique may guide stakeholders to construct robust AML frameworks and contributes to academic research in AML.

How effective are the current global standards in combating money laundering and terrorist financing?

PurposeThe purpose of this paper is to study the impact of global anti-money laundering and countering the financing of terrorism (AML/CFT) standards on combating money laundering and terrorist financing (ML/TF) efforts. This study will assess the impact of AML/CFT legal framework as well as the effective implementation of the framework on combating crimes.Design/methodology/approachThe author develops an AML/CFT effectiveness index using the results of 11 immediate outcomes in mutual evaluation reports to measure the overall effectiveness of regimes in combating ML/TF. In addition to this index, the AML/CFT compliance index is used to measure the strength of the AML/CFT legal framework of countries. A model was developed and tested to measure the impact of the AML/CFT legal framework and its effective implementation on corruption, bribery, terrorism and crimes.FindingsThe results suggest that the effective implementation of the AML/CFT legal framework is important to combat ML/TF. The existence of a sound AML/CFT legal framework alone will not be sufficient to combat ML/TF. Therefore, countries are required to implement their legal framework effectively to achieve the AML/CFT goals of the country as well as the global policymaker. The empirical results show a significant relationship between the AML/CFT effectiveness index with the proxies the author used to capture corruption, bribes and crimes. Considering the wide range of implications of the crimes, which are related to ML/TF, this study suggests the global policymakers to further strengthen the monitoring mechanism of AML/CFT deficient countries to protect the global financial systems from criminals.Practical implicationsThere is a dearth of studies on the impact of the effectiveness of the AML/CFT regime on combating ML/TF. Therefore, this study will lay the foundation for future studies on measuring the effectiveness of an AML/CFT regime. More appropriate measures will be developed in the future based on this foundation.Originality/valueThis paper is an original work done by the author, which discusses the impact of Financial Action Task Force standards on combating ML/TF. The AML/CFT effectiveness index is the original idea of the author, which can be used as a quantitative measure to capture the effectiveness of the AML/CFT regimes in future studies.

Updates on Hong Kong’s anti-money laundering laws 2020

Purpose The purpose of this paper is to discuss the latest developments of anti-money laundering (AML) laws in terms of case law and to give meaningful response in relation to certain key findings (KFs) and recommendations by the financial action task force contained in its mutual evaluation report dated September 2019. Design/methodology/approach In terms of AML case law, the authors analyse the latest judgment from the Hong Kong (HK) court of final appeal. In terms of the evaluation report, the authors outline salient points from the KFs and recommendation, commenting on their likelihood of success. Findings With the developments in AML case law and the KFs identified, HK is expected to maintain its high standard in AML/counter financing of terrorism (CFT) compliance. Originality/value A robust AML/CFT regime is the bedrock of HK’s reputable status as an international financial centre. This study seeks to illicit meaningful interactions amongst all stakeholders.

Role of FATF in spearheading AML and CFT

Purpose This study aims to define the role of the Financial Action Task Force (FATF) and its Style Regional Bodies (FSRBs) that combat money laundering (ML) and terrorist financing (TF) by measuring how well some Arab countries have complied with FATF’s “Forty Recommendations” with respect to the regulatory framework. Design/methodology/approach This study combines the comparative analysis methodology with a descriptive analytical approach to compare three member countries of the Middle East and North Africa Financial Action Task Force (MENAFATF). It uses secondary data sources, namely, theoretical literature on the subject and FATF reports on mutual evaluation reports (MERs). Findings This study examined the variations in compliance with FATF standards among three member countries of MENAFATF: Bahrain, Morocco and Jordan. While Bahrain has almost completely fulfilled these standards, Morocco and Jordan have only partially fulfilled them. These variations in compliance are mainly attributed to the uneven level of readiness in the countries’ commitment to the legislative and regulatory requirements before the process of mutual evaluation. Originality/value Researchers can find several studies on the role of FATF and FSRBs in combating ML and TF. However, no studies have focussed on the application levels of FATF standards, which are relevant to the regulatory frameworks of member countries. This study makes a unique and vital contribution, as it demonstrates the effectiveness of applying the FATF standards.

Austria

This Technical Note (TN) sets out the findings and recommendations made in the context of the 2019 Financial Sector Assessment Program (FSAP) for Austria in the areas of AML/CFT. It provides a targeted review of Austria’s progress in addressing the ML/TF vulnerabilities in the banking sector, including AML/CFT supervision and cross-border activities, progress in enhancing the transparency of legal persons and arrangements, and risks related to virtual assets (VAs) and virtual assets service providers (VASPs). This review is not an assessment or evaluation of the country’s AML/CFT regime. In this regard, Austria’s AML/CFT system was assessed by the Financial Action Task Force (FATF) against the current FATF standard and the Mutual Evaluation Report (MER) was adopted in September 2016. The authorities are focused on improving the effectiveness of the legal, regulatory, and supervisory framework in mitigating ML/TF risks.

Deploying Opportunistic Data to Improve Anti-Money Laundering National Risk Assessments

This paper outlines methods for anti-money laundering authorities to identify and deploy already extant or easily created databases to improve their National Risk Assessments (NRAs). NRAs are commonly used as an essential element in mutual evaluation reports prepared by the Financial Action Task Force

Malta

This technical note (TN) sets out the findings and recommendations of the Financial Sector Assessment Program (FSAP) for the Republic of Malta in the areas of Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT). It summarizes the findings of a targeted review of several aspects of Malta’s progress in addressing AML/CFT vulnerabilities in the financial sector, specifically the banking sector. A full assessment of the AML/CFT framework against the current Financial Action Task Force (FATF) standard was conducted by MONEYVAL in 2018, and the mutual evaluation report was published in July 2019. 2,3 Although significant steps have been taken to strengthen the AML/CFT regime since the March 2012 fourth round MONEYVAL mutual evaluation report to bring the AML/CFT framework into line with the 2012 FATF standard and improve its effectiveness, overall effectiveness is still lacking. The authorities developed an ambitious national strategy and action plan for prioritizing AML/CFT policies and activities, but it is still in its initial phase of implementation.

Anti-money laundering and combating the financing of terrorism compliance

PurposeThe purpose of this paper is to investigate how well countries comply with global anti-money laundering and counter-financing of terrorism (AML/CFT) regulations.Design/methodology/approachWith the help of an AML/CFT compliance index composed by the author, this study is able to numerically quantify countries’ AML/CFT compliance levels. Countries were selected based on their membership with the Financial Action Task Force (FATF), precisely members who have gone through at least one round mutual evaluation and have duly submitted a report to the task force. The AML/CFT index was composed by assigning numeric values to the individual country ratings across all 49 FATF recommendations contained in their mutual evaluation reports (MER).FindingsSome notable findings include the yearly global level of AML/CFT compliance between the period 2004 and 2016, as well as compliance levels across continents for the same period. Compliance levels for the seven components of the FATF recommendations were also reported to help assess which set of recommendations countries comply with the most and why they do. It was also found that countries’ lack of compliance was as a result of high cost of compliance with FATF recommendations.Research limitations/implicationsThe main limitation of this study was a lack of high-frequency AML data of countries, especially less-developed countries.Originality/valueThe uniqueness of this paper lies in the fact that the AML/CFT compliance index constructed and used in the study is the first of its kind.

Mitigating financial leakages through effective money laundering investigation

PurposeThis paper aims to conduct a comparison on the effectiveness of the law enforcement agencies (LEAs) of Australia and Malaysia in investigating money laundering cases by looking into the legal system and operational issues faced in conducting the investigation.Design/methodology/approachThe purpose of this paper is to review and analyze the data collected from the Financial Action Task Force (FATF) Mutual Evaluation Report, focusing on the information outlined in the third chapter. The legal system and operational issues cover the area of technical compliance and effectiveness compliance, which were introduced in the latest FATF Evaluation Methodology issued in 2013.FindingsThe results show that both countries have the power needed to investigate money laundering and terrorism financing under their respective Anti-Money Laundering Act. However, Australia is seen to have a better investigative support system to assist LEAs during the investigation process. This explains the reason for difficulties in increasing the number of prosecutions for money laundering and terrorism financing cases. Hence, improvement actions are needed in curbing this issue.Practical implicationsThe result suggests that Malaysia should strengthen the cooperation, coordination and capacity among LEAs to ensure effective targeting, investigation and prosecution of money laundering. The government should also revise the money laundering investigation time frame and broaden the power of LEAs in retrieving information during the investigation process. Malaysia should also enhance the investigative support system, which will be helpful for LEAs in gathering sufficient evidence to support their money laundering charges. Unlimited power in gathering evidence is prominent to charge money launders as it helps to gather information required for prosecution.Originality/valuePrior literature focuses on the prevention mechanism, where this paper aims to focus on detection and investigation mechanism focusing on money laundering investigation conducted by LEAs. Lack of study on money laundering investigation calls for this research to be done to understand the strengths and weaknesses to improve its effectiveness in the future.

Can the AML system be evaluated without better data?

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.