UPDATE: the World Bank hosts a discussion on the report that is the subject of this post May 30, 12:00 noon EDT. Link to register here.
Today’s guest post summarizes an April World Bank study of money laundering risk assessments. The first step in preventing money laundering is identifying where it occurs and how likely it is to occur. In short, the risks of money laundering. The Bank study evaluated risk assessments eight governments had conducted in accordance with the methodology prescribed by the Financial Action Task Force. For reasons that will become plain, the post’s author has chosen to remain anonymous.
The title from a new World Bank report on money laundering risks could scarcely be blander: National Assessments of Money Laundering Risks: Learning from Eight Advanced Countries’ NRAs. The content is anything but. Authored by Joras Ferwerda of Utrecht University and Peter Reuter of the University of Maryland, the report concludes that not a one of the eight money laundering risk assessments examined, all done as the report’s title advertises by “advanced” countries, is worth a damn. Not a one merits a passing grade from the two professors, both highly regarded money laundering experts. What’s worse, despite close to a decade of experience doing such assessments, the two find that no government seems to have learned a thing from the mistakes of others.
This raises a fundamental question about the existing AML regime. How can it be effective if national authorities lack an understanding of the money laundering risks their countries face?Continue reading