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

Dr Ron Pol
The Dark Side
Published in
6 min readMar 11, 2020

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RF Pol, AMLassurance.com

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.

Despite extensive, intrusive, and costly, evaluation processes, a trio of leading professors lamented the reality:

“there has been minimal effort at [anti-money laundering] evaluation…in the sense in which evaluation is generally understood [in] public policy and social science,…namely how well an intervention does in achieving its goals.”

Mostly measuring effort, activity, and processes (wrongly labeled ‘outcomes’), the rating system fails to assess outcomes as generally understood as the impact and effect of anti-money laundering activities.

Outputs mislabeled ‘outcomes’

Possibly contributing to design faults, an ethos called “new public management” dominated public administration in many countries from the 1980s. NPM focused on efficiency and performance targets. Good things, you might think. However, as described by Professor Garland, such targets tended to:

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Dr Ron Pol
The Dark Side

Outcomes science, applied to life. Current main focus AML/CFT. Outcomes architect, loves engaging with open minds. See: https://bit.ly/3bj0Y3y