2 and 3 November 2007 Conference 'Tackling Money Laundering'

3 November 200715.35-15.55

Joras Ferwerda & Silvester Bosma

Measuring Compliance

2 and 3 November 2007 Conference 'Tackling Money Laundering'

“Measuring Compliance”

Introduction

•Anti-money laundering policy

•FATF: 40 recommendations

•Assesments

2 and 3 November 2007 Conference 'Tackling Money Laundering'

“Measuring Compliance”

Assesment problems

•Different assessors-IMF, FATF, Worldbank and Moneyval

•Different in quality, shape and size

2 and 3 November 2007 Conference 'Tackling Money Laundering'

“Measuring Compliance”

“As a result of the way the assessments were made and even their layout, the assessments differed widely in quality,

content, layout, and even across institutions and countries, making it very difficult to make sensible cross-country

comparisons and analysis.”

(Arnone and Padoan, 2006)

2 and 3 November 2007 Conference 'Tackling Money Laundering'

“Measuring Compliance”

Creating the database

•Based on available assesments

•Guideline for analysing assesments

-Also for checking, updating and extending the database

2 and 3 November 2007 Conference 'Tackling Money Laundering'

“Measuring Compliance”

First step: Scale and general index

General index of the scale:

0 = No policy or action performed

1 = Only some policy or action performed / there has been an attempt or some advice

2 = Still a lot to be done

3 = Some problems or some sectors uncovered

4 = Minor shortcomings / considerations for improvement

5 = Comprehensive implementation

2 and 3 November 2007 Conference 'Tackling Money Laundering'

“Measuring Compliance”

Second step: overruling guidelines

•Recommendation and Country specific

-Recommendation specific: 1. Palermo not implemented: -1

-Country specific: Denmark, if Greenland and Faroer do not apply to recommendations: -1

2 and 3 November 2007 Conference 'Tackling Money Laundering'

“Measuring Compliance”

Third step: Double check

•First seperate analysis

•Then compare and discuss the score

-Ferwerda 3 and Bosma 5 does not necesarily mean 4

2 and 3 November 2007 Conference 'Tackling Money Laundering'

Cou R J S D F Final score is based on

AUS 1 4 5 1 4 (8) Criminalised at state and territory level and these offences vary in comprehensiveness

AUT 1 4 3 1 3 (120) Palermo not implemented and ratified (Table 10 - sentence 3) Raise penalty level for simple ML offences

BEL 1 5 5 0 5 (7) OK

DAN 1 4 4 0 4 (Table) Greenland and Faroer not fully consistent, ran…

FRA 1 5 5 0 5 (149) Palermo + Vienna implemented, Criminalization extensive

GER 1 5 4 1 5 (6) Criminalized on basis of Palermo and Vienna

GRE 1 3 2 1 2 (140) Expand ML to all serious offences and dual crimi...

IRE 1 5 5 0 5 (7) Broad ML offence

ITA 1 5 4 1 5 (In text and table no indications for deduction of points have been found)

LUX 1 2 2 0 2 (7, table 2, 22) Palermo not ratified, scope too limited

NL 1 4 4 0 4 (113) Palermo not implemented

2 and 3 November 2007 Conference 'Tackling Money Laundering'

“Measuring Compliance”

Analysis of the database

8090

100110120130140150160170180

Ag

gre

ga

ted

sc

ore

Country = average (143,3)“The aggregated compliance score for each

country”

2 and 3 November 2007 Conference 'Tackling Money Laundering'

“Measuring Compliance”

2

2,5

3

3,5

4

4,5

5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 2122 23 2425 2627 2829 30 3132 3334 3536 37 3839 40

Recommendation #

Av

era

ge

sc

ore

= average (3,6)“The average score of all countries on the 40 different recommendations”

2 and 3 November 2007 Conference 'Tackling Money Laundering'

“Measuring Compliance”

Application of database / Further Research

1. Measuring the effect of policy on different aspects-Examples: Measuring effects of anti-money laundering

policy on criminal behavior or economic growth

2 and 3 November 2007 Conference 'Tackling Money Laundering'

“Measuring Compliance”

Application of database / Further Research

2. Test whether the policy works-Examples: What is the effect of anti-money laundering

policy, does it work? Is there less money laundering in countries with high compliance? Or do countries attract money laundering with specific types of anti-money laundering policy?

2 and 3 November 2007 Conference 'Tackling Money Laundering'

“Measuring Compliance”

Application of database / Further Research

3. Consideration of the way the 40 recommendations are constructed-Examples: Research on specific recommendations;

compliance score for recommendation 14 is 5 for all our countries, is this still useful/a good measure?

2 and 3 November 2007 Conference 'Tackling Money Laundering'

3 November 200715.55-16.05

Discussion