AML Country Risk Review
Designing an aspirational country risk model. Explores what a next-generation AML country risk model could look like, based on ideal data sets. Step one involves concept design; step two would address data availability and collection.
About
Country risk assessments are a critical component of anti-money laundering (AML) and counter-terrorist financing (CTF) frameworks. Existing models commonly rely on aggregating publicly available risk indicators or referencing third-party indices to produce country risk scores ranging from low to high. These outputs are used extensively by regulated entities—including banks, fintechs, and other financial intermediaries—to fulfill regulatory obligations around firm-wide and customer-level risk assessments.
While tools like the Basel AML Index, World-Check, and platforms such as KnowYourCountry.com and CountryRisk.io are widely used, they primarily repackage available data. This limits their ability to drive innovation, nuance, or tailored risk assessments aligned with fast-evolving financial crime threats.
The GCFFC proposes a two-step approach to radically improve this landscape:
Step 1: Design an Aspirational Country Risk Model
This step involves defining what a fit-for-purpose country risk model should ideally look like, assuming the availability of more robust, structured, and timely data. This model will go beyond conventional scorecards by integrating:
Real-time financial crime typologies
Threat-weighted predicate offences
Effectiveness of country-level enforcement and supervisory responses
Transparency, beneficial ownership, and cross-border cooperation metrics
Political and governance risk dimensions
The goal is to build a forward-looking model that helps stakeholders understand not just the risks inherent to a jurisdiction, but also its capacity to respond effectively.
Step 2: Data Collection & Testing (Conditional)
If Step 1 results in a viable model, the next phase will focus on sourcing or encouraging the generation of relevant data sets—through partnerships with governments, academia, multilaterals, and civil society. This will involve:
Identifying data gaps
Proposing pilot projects or collaborations
Encouraging international cooperation to standardize and share relevant data
Key Deliverable:
A white paper outlining either:
a) the full aspirational AML country risk model, or
b) a detailed commentary on what such a model should look like and why.
If consensus is achieved and viable data sources are identified, a prototype model or demonstration tool may follow.