Can the AML system be evaluated without better data?

Abstract

The Anti-Money Laundering regime has been important in harmonizing laws and institutions, and has received global political support. Yet there has been minimal effort at evaluation of how well any AML intervention does in achieving its goals. There are no credible estimates either of the total amount laundered (globally or nationally) nor of most of the specific serious harms that AML aims to avert. Consequently, reduction of these is not a plausible outcome measure. There have been few efforts by country evaluators in the FATF Mutual Evaluation Reports (MERs) to acquire qualitative data or seriously analyze either quantitative or qualitative data. We find that data are relatively unimportant in policy development and implementation. Moreover, the long gaps of about 8 years between evaluations mean that widely used 'country risk' models for AML are forced still to rely largely on the 3rd Round evaluations whose use of data was minimal and inconsistent. While the 4th round MERs (2014-2022) have made an effort to be more systematic in the collection and analysis of data, FATF has still not established procedures that provide sufficiently informative evaluations. Our analysis of five recent National Risk Assessments (a major component of the new evaluations) in major countries shows little use of data, though the UK is notably better than the others. In the absence of more consistent and systematic data analysis, claims that countries have less or more effective systems will be open to allegations of ad hoc, impressionistic or politicized judgments. This reduces their perceived legitimacy, though this does not mean that the AML efforts and the evaluation processes themselves have no effects.Crime Law Soc Change (2018) 69:307-328 https://doi

Anti-money laundering: The world's least effective policy experiment? Together, we can fix it

“…Despite such structural design flaws there remain surprisingly few connections between anti-money laundering practice and the scholarship and practice of public policy. (Examples include de Koker and Turkington 2015; Halliday, Levi, and Reuter 2014;Levi et al 2018;McConnell 2015, 238;Pol 2018aPol , 2018bPol , 2019aPol , 2020Sharman 2011;Zoppei 2017).…”

“…(With three rounds of evaluations completed since 1990, the fourth round began in 2014 and is due to conclude in 2024.) A few months later, an influential group of global banks amplified researchers' earlier calls to engage with policy effectiveness principles (Halliday et al 2014;Levi et al 2018;Pol 2018aPol , 2018bPol , 2019aPol , 2019bPol , 2019cPol , 2020. The Wolfsberg Group (2019) reiterated calls to focus on outcomes rather than just compliance.…”

“…Anecdotal successes may not prove policy success, but individual success stories mask the reality of overall policy failure. Relevant data are also scant (Levi et al 2018;Pol 2019a) and obscured by prevailing belief systems and narratives. For instance, the perceived failure of banks and regulators "properly" or "fully" to implement existing rules is often blamed, despite countervailing evidence (noted in Section 6).…”

“…Likewise, FATF blames governments for "taking a tick-box approach to regulatory compliance, and focusing on processes rather than outcomes" (Lewis 2019), seemingly oblivious to public policy issues such as whether the design or implementation of its policy model contributes to (or causes) such behaviors. Unasked, for instance, is whether FATF's model is itself a "tick-box" regulatory framework, if its "outcome" measures properly constitute outcomes as generally recognized (Halliday et al 2014;Levi et al 2018;Pol 2018aPol , 2018b, or whether FATF's idiosyncratic assessment methodology forces governments to measure processes rather than outcomes, of which it now complains.…”

Analyzing the Risk of Legalization of Proceeds of Crime through Ukrainian Banks

“…Якщо говорити про зовнішні фактори, які впливають на процес легалізації ДОЗШ, то більшість робіт присвячена аналізу та ідентифікації клієнта і фінансової операції, що ним проводиться. При цьому, як зазначають автори статті [13], якісно оцінити ефективність тих чи інших систем протидії легалізації ДОЗШ не є можливим без наявності достатньо достовірних даних щодо загального обсягу фінансових операцій з відмивання коштів. Отже, зважаючи на недостатню розробленість методичних підходів з оцінювання загрози відмивання коштів, отриманих злочинним шляхом, метою статті є аналіз ризику відмивання злочинних доходів із використанням послуг банків України.…”