FINANCE: Cyprus among top ten decliners in fighting money laundering

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Cyprus is among the top 10 decliners globally in combating money laundering and terrorism financing risks (ML/TF), according to the Basel Anti-Money Laundering (AML) Index.

The Basel AML Index is an independent annual ranking that assesses the risk of money laundering and terrorist financing around the world.

Cyprus’ risk-rating score worsened by 0.75 points to 5.01 compared to 2017 putting it 80 among 129 countries – Finland (2.73) was the best performing country at 129 and Tajikistan (8.3) was the worst in first place.

However, Finland, Iceland, Denmark and Slovenia, along with Cyprus – with the seventh highest increase – recorded a significantly higher risk rating in 2018.

“The recent Danske Bank scandal seems to confirm the observation that there are big issues with the effectiveness of money laundering supervision in countries generally regarded as low-risk,” said the report.

“The results illustrate that most countries are typically stronger on technical compliance and struggle with effective implementation of legal requirements,” it added.

Although still at the top of the list of low-risk countries, Finland saw a deterioration in its overall score due to changes in its Financial Secrecy Index rating, as well as other indicators of corruption and financial transparency.

Poland demonstrated higher risks in such indicators as financial secrecy, corruption, financial transparency and political and legal risks.

“Cyprus saw increased financial secrecy scores and was also, crucially, included in the UN INCSR list of Jurisdictions of Primary Concern,” said the report.

This is the seventh edition of the Basel AML Index issued by the International Centre for Asset Recovery, part of the Basel Institute on Governance.

Estimates of the amount of money laundered worldwide range from US$500 billion to a staggering US$1 trillion. 

“Most countries are making little or no progress towards ending corruption and public transparency is showing signs of decline, with governments making less information available about how they manage public funds,” the report said.

It said indications are that global press freedom has declined to its lowest point in 13 years.

“All these factors are known to impact negatively on the risk of ML/TF.”

Over the seven years since it was first calculated, the Basel AML Index has indicated slow progress among most countries in improving their ML/TF risk scores.

Some 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 mean average level of risk remains above this (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). Between 2012 and 2018, only 17% (21/129) have improved their score by 1 point or more.

The downward trend is more striking as 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,” said the report.