Research on the Relationships Between FATF Assessment Effectiveness, Compliance and Money Laundering Risk

Money laundering (ML) provides criminals with a way to legalize the proceeds of crime, which brings great harm to the economic development and financial stability of all countries in the world. As the most authoritative organization in the international anti-money laundering (AML) cooperation system in the world, FATF is responsible for formulating AML related standards and conducting mutual evaluations to examine the compliance and effectiveness of member countries’ AML work. However, FATF has not conduct an overall assessment and systematic comparison of the ML risks faced by countries. The Basel Institute for Governance provides standards for quantifying ML risks in various countries, and uses the Basel AML Index to measure ML risks in different countries. This paper demonstrates the relationship between FATF evaluation data and Basel AML Index, respectively confirms the negative correlation between the effectiveness of AML system, technical compliance and the ML risk faced by various countries. On this basis, this study puts forward suggestions for the ML risk faced by the international community.