Project Summary:

Abstract

In their efforts to strengthen the effectiveness of Anti-Money Laundering/Countering the Financing of Terrorism Frameworks across the Nordic-Baltic Region (Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, and Sweden), the Governors of the Nordic-Baltic Central Banks reached out to the IMF to request technical assistance. The request stems from various international money laundering banking scandals (ABLV, Danske Bank, Nordea, Swedbank), involving cross-border payments by non-residents that exposed financial integrity risks in the financial sector of the region, attracting international scrutiny on the level of non-resident Money Laundering/Terrorist Financing ML/TF risks and highlighting the vulnerabilities related to AML/CFT risk-based supervision of banks in the region. The flagship project relied on a novel methodology to leverage data analysis to understand ML/TF threats and vulnerabilities and their potential impact on financial stability, and developed country and regional recommendations. Notably, the project involved an analysis of (i)potentially high-risk financial flows to and from the region; (ii) the AML/CFT domestic and regional supervisory landscape related to banks and virtual assets; and (iii) the potential implications of financial integrity shocks on financial stability.