Whilst Lawyers, Accountants and Estate Agents are respectively regulated by their own professional bodies or HMRC, all base their Anti-Money Laundering guidance on national laws, rules and regulations.
All UK regulated businesses are required as part of their Anti-Money Laundering obligations to produce, and update as necessary, a general business risk assessment and a service line risk assessment. One of the legal/regulatory requirements in carrying out any business risk assessment is to have regard to geographical risks – that is the source of world-wide money and the risks of laundering dirty money.
The FCA “Guide to Financial Crime” specifically states that in assessing whether businesses are meeting their Anti-Money Laundering obligations, the FCA will consider the extent to which businesses adhere to the Guidance issued by the Joint Money Laundering Steering Group (“JMLSG”) of the Bank of England. The JMLSG Guidance specifically endorses the Country Perceptions Index (“CPI”) which is issued annually by “Transparency International”.
In assisting businesses in crafting their ant-money laundering systems and controls, I recommend incorporating the CPI into their risk assessments to craft a country ranked white/grey/black list, on the simple basis that a business cannot be criticised or sanctioned for following FCA Guidance. The CPI ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and businesspeople, uses a scale of 0 to 100, where 0 is highly corrupt and 100 is very clean.
Transparency International has just issued its 2018 CPI. More than two-thirds of countries score below 50 on this year’s CPI, with an average score of just 43. It reveals that the continued failure of most countries to significantly control corruption is contributing to a crisis in democracy around the world. While there are exceptions, the data shows that despite some progress, most countries are failing to make serious inroads against corruption.
The top countries are Denmark and New Zealand with scores of 88 and 87, respectively. The bottom countries are Somalia, Syria and South Sudan with scores of 10, 13 and 13, respectively. It is generally the case that countries that protect democratic rights and values score highly, with Western Europe and the EU generally scoring highest. One notable exception is Hungary, which whilst generally accepted as low risk as being part of the EU, it actually scores 46, which is more corrupt that Jordan and Saudi Arabia at 49.
It should be noted that there are other indices’ and assessments issued by international bodies such as the Financial Action Task Force and the Basel Institute on Governance, but I believe that for most businesses, following the Transparency International CPI as recommended by the FCA is good enough.
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