SL ranked 23rd riskiest country for money laundering and terrorist financing in Basel AML Index 2020

• Second most risky country in South Asia behind Afghanistan
• India emerges as least risky in region, followed by B’desh and Pakistan

Sri Lanka has been ranked as the 23rd riskiest country for money laundering and terrorist financing, among 141 countries, according to Basel AML Index 2020.

The Basel AML Index, which is developed and maintained by the Swiss-based International Centre for Asset Recovery of the Basel Institute on Governance, measures the risk of money laundering and terrorist financing, in countries around the world. 

According to the index, Sri Lanka was the second most risky country in terms of money laundering and terrorist financing in the South Asian region, with a score of 6.52 while Afghanistan was crowned as the riskiest in the region as well globally, with a score of 8.16 this year. 

India was the least risky in the region, followed by Bangladesh and Pakistan. 

“This region has the highest overall risk score and exceeds the global average across all categories. Major deficiencies are the quality of AML/CFT frameworks and very high levels of corruption and bribery. But governments will need to take a coordinated and holistic approach across all categories in order to lower their ML/TF risks and improve their healthy access to financial markets and investments,” the report reads. 

However, Sri Lanka was included in the Public Edition of the Basel AML Index this year, for the first time since 2017, due to the availability of sufficient data, with increasing coverage by Financial Action Task Force (FATF) fourth-round evaluations. 

In 2017, Sri Lanka was ranked 25th riskiest country, among 145 countries. 

The European Commission delisted Sri Lanka from its list of High Risk Third Countries, with Anti-Money Laundering and Countering the Financing of Terrorism Strategic Deficiencies, published on May 7, this year.  

Sri Lanka had been identified by FATF as a jurisdiction with strategic AML/CFT deficiencies in its Compliance Document, which is more commonly identified as the ‘Grey List’ in October 2017. 

Upon listing, the country’s authorities worked on implementing a time-bound action plan assigned by FATF, to address the strategic deficiencies identified. After evaluating the progress in implementing the action plan, the FATF delisted Sri Lanka from its Compliance Document at its Plenary held during October 13-18, 2019, in Paris.

The report highlighted that weak oversight and dormant systems leave countries’ doors wide open to money laundering despite adopting comprehensive global standards.
“Too many countries’ financial systems remain too exposed to money laundering, terrorist financing and related crimes,” it stated.