World Bank Report: “National Assessments of Money Laundering Risks: Learning from Eight Advanced Countries’ NRAs” published
The Financial Action Task Force (FATF) requires national governments to demonstrate an understanding of the money laundering risks in the country. Such an understanding is the foundation for effective control of money laundering under the risk-based approach the FATF calls for.Jonas Ferwerda of Utrecht University and Peter Reuter of the University of Maryland evaluated on behalf of the World Bank risk assessments that several governments had conducted in accordance with the methodology prescribed by the FATF. The authors analysed 11 National Risk Assessments (NRAs) published by 8 eight systemically important countries (Canada, Italy, Japan, the Netherlands, Singapore, Switzerland, the United Kingdom, and the United States) to test whether they demonstrate that basic understanding and to draw lessons for national governments from those NRAs. The report has recently been published.
According to the report’s results, these eight governments would show very different conceptualisations, analytic approaches, and products. Each would raise serious issues regarding the risk assessment methodology. For example, most would rely largely on expert opinion, which they solicited in ways that would be inconsistent with the well-developed methodology for making use of expert opinion. They would have misinterpreted data from suspicious activity reports and would have failed to provide risk assessments relevant for policy makers. Only one would have described the methodology employed. Although the challenge of conducting strong risk assessments is great, given the difficulty of estimating the extent of money laundering in any sector, the findings based on this limited sample would point to ways to improve substantially on existing practices.
The report concludes with a set of suggestions for (international) policy makers and those conducting NRAs for improving risk assessments. Suggestions include increased clarity about the conceptualisation of risk, transparency about data and methods so that each country can learn from others, and the adoption of more formal and standardized methods of eliciting expert opinion. The World Bank hosts a panel discussion on the report on 30 May 2022. The results of the study would raise the question of whether governments are really aware of the money laundering risks they face as a recent commentary indicates.
These are the upcoming dates for our Annual General Meetings:
Thursday, 24 March 2022
Thursday, 23 March 2023