SL makes significant strides in combatting financial crime, ranks amongst top performers globally
SL makes significant strides in combatting financial crime, ranks amongst top performers globally
Sri Lanka has made remarkable progress in the global fight against money laundering and terrorist financing, earning a place among the top ten countries showing the greatest improvement, according to the latest 13th Basel Anti-Money Laundering (AML) Index for 2024.
The country achieved an impressive 27 per cent enhancement in its efforts to tackle financial crime, as evidenced by the substantial reduction in its risk score, which fell from 5.42 in 2023 to 5.28 this year.
This improvement has moved Sri Lanka up the rankings, with the nation now sitting at 80th place among 164 jurisdictions, compared to 62nd in the previous year’s assessment, which included 152 countries.
This notable shift highlights Sri Lanka’s ongoing commitment to strengthening its anti-money laundering (AML) and counter-terrorist financing (CFT) frameworks.
Sri Lanka’s success in these areas reflects the positive outcomes of its recent reforms.
The Basel Index, which is a comprehensive, data-driven tool assessing global risks related to money laundering and financial crimes, recognises the significant strides made by countries that were once regarded as high-risk due to insufficient technical compliance with international standards.
Sri Lanka, which had previously been grey-listed by the Financial Action Task Force (FATF), is now widely seen as an example of how such designations can serve as a catalyst for necessary and transformative changes.
The Basel Index evaluates countries across five key domains that are critical in understanding money laundering risks: corruption, financial secrecy, public transparency, the effectiveness of AML/CFT measures, and overall governance.
These areas are assessed through data collected from 17 publicly available sources, allowing the Basel Institute on Governance to determine risk scores for each country.
Following its removal from the FATF’s grey list, Sri Lanka has made continued progress in aligning with FATF’s rigorous standards. The latest ranking confirms that Sri Lanka is not only a leader in South Asia but also stands out globally for its enhanced compliance efforts.
Notably, Sri Lanka remains the only South Asian nation to score above the global average in the Basel Index, even though both India and Nepal have been included in this year’s Public Edition due to improved data availability.
However, despite Sri Lanka’s positive strides, the broader South Asian region still faces significant challenges in several key areas. The report noted that issues related to public transparency and accountability remain a concern across the region, with the average regional scores in these areas still trailing behind the global average.
Globally, the 2024 report also highlighted a troubling trend in the Domain 2 category, which assesses corruption and fraud.
The risk scores for this domain rose from 5.02 in 2023 to 5.12 in 2024, a reflection of changes in both the inclusion of new fraud-related indicators and shifting performances on existing corruption and bribery metrics.
High-income nations with major financial hubs, such as New Zealand, Switzerland, and Singapore, were particularly affected by this increase, as nearly 44 per cent of countries saw higher risk scores in this domain.
Nevertheless, Sri Lanka emerged as one of the countries benefiting from the revision of indicators in Domain 2. Approximately half of the countries, including Sri Lanka, saw lower risk scores, positioning the island nation among the top twenty beneficiaries of this methodology change.
Looking ahead, Sri Lanka’s improved standing in the Basel Index provides a strong foundation for its upcoming Mutual Evaluation (ME) in 2025.
