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Global Ratings Fail, By Design, But Some Countries Benefit
AML rating system fundamentally flawed, harms some countries, and lets others ‘dial up’ better scores on demand
Last week, I explained why the global anti-money laundering system (costing us all trillions of dollars) is “almost completely ineffective.” Technology and other ‘solutions’ framed in a regulatory straight-jacket limit the success rate to a puny 0.1 percent impact on criminal finances.
This week saw a new milestone. The Paris-based Financial Action Task Force (FATF) just released the 100th country-level report (Mali) assessing the effectiveness of anti-money laundering regimes.
This article explains why the global rating system fails to evaluate effectiveness in any meaningful way. But low ratings nonetheless harm some countries, whilst others have learned some of the secrets for using the system’s design flaws to ‘dial-up’ higher scores.
Effectiveness disconnect
About half-way through the current round of assessing countries’ compliance with FATF standards, 100 full evaluations and 82 follow-up reports released between 5 December 2014 and 10 March 2020 generated 21,709 pages of analysis, 5,092 ratings, and 570 re-ratings.
