Transparency International publishes 2021 Corruption Perceptions Index

The anti-corruption body Transparency International recently published its 2021 Corruption Perception Index (CPI).

The CPI ranks 180 countries and territories by their perceived levels of public sector corruption  on a scale of 0 (very corrupt) to 100 (very clean). Despite two years post a damaging COVID-19 pandemic, this year’s CPI shows that corruption levels remain the same as the previous, most recent years.

Why does the 2021 CPI matter?

FinCrime professionals need to look at a wide array of reliable sources to determine the level of customer due diligence that is appropriate to clients, including how corrupt a relevant jurisdiction is - that’s where the CPI comes in.

From a regulatory perspective, regulation 35(1) of the Money Laundering Regulations 2017 (MLRs) requires firms to implement risk-based procedures and controls for managing PEPs. This includes applying Enhanced Due Diligence measures such as establishing, where relevant, the source of funds or wealth.

The CPI is particularly helpful when it comes to investigating positive matches for Politically Exposed Persons (PEPs) or their Relatives and Close Associates (RCAs).  PEPs and RCAs generally pose a higher risk in terms of money laundering since, by definition, they are vulnerable to grand corruption.

Who is this relevant for?

Money laundering officers (MLRO’s), Heads of Compliance and those involved in establishing, implementing and maintaining financial crime systems and controls should take note.‍

What should you do?

• Consider updating your anti-bribery and corruption (ABC) risk assessment, policies and training materials
• Consider updating your AML/CTF policy, particularly if your firm uses a country risk matrix. Assess the impact on clients from countries which have dropped in ranking on the index.
  

Key findings

87%, or 131 countries have shown no significant progress in the fight against corruption within the last decade, with 27 countries  hitting a record low.

68% of the 180 countries scored below 50 against the backdrop of an average international score of just 43.

The highest ranked countries are:

• New Zealand, Finland and Denmark (88)
• Norway, Singapore, Sweden (85)
• Switzerland (84)
• The Netherlands (82)
• Luxembourg (81)
• Germany (80)

The UK falls just outside of the top 10 with a score of 78, a +1 increase on its 2020 ranking.

At the bottom of the index are:

• South Sudan (11)
• Syria (13)
• Somalia (13)
  

The below graphic from the report shows the biggest movers:

What next?

It is important that firms put in place robust ABC, AML and PEP management frameworks. It helps to have a fresh pair of competent eyes to make sure you are on the right track. Should you require expert support in these matters, be sure to get in touch and we would be more than happy to assist.