Sri Lanka has earned recognition as one of the top ten countries making the most progress in combating money laundering and terrorist financing, according to the 13th Basel AML Index 2024.
The nation achieved a remarkable 27% improvement in addressing money laundering and terrorist financing issues, as reflected in the difference between its Mutual Evaluation Report (MER) and the latest follow-up report. This achievement places Sri Lanka among the global leaders in implementing Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) reforms.
In the latest rankings, Sri Lanka recorded a risk score of 5.28, ranking 80th out of 164 jurisdictions assessed for money laundering risks. This represents significant progress compared to the previous year when it had a higher risk score of 5.42 and was ranked 62nd out of 152 countries.
The Basel AML Index highlighted the significant progress made by countries historically low in technical compliance with Financial Action Task Force (FATF) recommendations, including those previously grey-listed, such as Sri Lanka. The report underscores that grey-listing often acts as a catalyst for necessary reforms, as evidenced by Sri Lanka’s advancement.
The Basel AML Index, developed by the International Centre for Asset Recovery (ICAR) at the Basel Institute on Governance, is an independent ranking and risk assessment tool. It evaluates risks associated with money laundering and related financial crimes based on data from 17 publicly accessible sources across five domains.
Since being delisted from the FATF grey list, Sri Lanka has continued to enhance its compliance with FATF recommendations, solidifying its position as the regional leader in AML/CFT reforms. It remains the only South Asian country to score above the global average in the Basel AML Index 2024, outperforming regional peers such as India and Nepal, whose inclusion in this year’s report was due to improved data availability.
Despite these advancements, the South Asian region still lags in areas such as public transparency and accountability, with average scores in these domains falling below the global benchmark. The report also noted global trends, revealing a rise in the average risk score for corruption and fraud (Domain 2) from 5.02 in 2023 to 5.12 in 2024. This increase is attributed to new fraud-related indicators and expanded country coverage.
The report noted that nearly 44% of countries recorded higher risk scores in Domain 2, including high-income nations with significant financial hubs like New Zealand, Switzerland, and Singapore. However, approximately 50% of countries, including Sri Lanka, benefited from reduced risk scores due to the inclusion of new indicators. Sri Lanka was ranked among the top 20 beneficiaries of these methodology changes.
Sri Lanka’s improved ranking augurs well for its upcoming Mutual Evaluation (ME) in 2025, which will assess the effectiveness of its AML/CFT frameworks. This continued progress reflects the nation’s commitment to combating financial crimes and fostering greater financial transparency on a global scale.
