Hong Kong has been ranked at the bottom of a new assessment of financial crime compliance effectiveness across 35 global jurisdictions, according to a report by the UK-based firm Napier AI. The study, which measures the anti-money laundering (AML) effectiveness of leading economies, evaluated each jurisdiction’s ability to counteract financial crime.
Napier AI’s report assigned scores out of 10, with higher scores indicating lower effectiveness, making 1 the optimal score and 10 the worst. Hong Kong received an 8.22, placing it just behind Russia and Romania, which scored 7.63 and 7.61, respectively. At the top of the list, Italy emerged with the highest ranking at 2.46, followed closely by the Czech Republic with 3.05 and Finland at 3.11.
The study’s scoring was based on four key factors: the estimated money laundering losses relative to each country’s GDP, the cost of AML compliance in comparison to these losses, the degree of AI adoption in AML processes, and “sentiment,” which derived insights from interviews with 25 AML experts.
The report noted that “leading global financial hubs” such as New York, London, Singapore, and Hong Kong experience “much larger financial losses to financial crime.” In Hong Kong alone, the estimated annual loss to financial crime is just under $26 billion, representing close to 7% of the city’s GDP. Napier AI explained, “A booming economy and global financial hub, Hong Kong is the third-highest market in the Napier AI / AML Index for money laundering losses as a share of the country’s GDP. This has driven up its index score.”
While Hong Kong ranks low, Napier AI praised the Hong Kong Monetary Authority (HKMA) as “one of the most innovative” regulators globally, commending its efforts to partner with private companies to advance AI-enhanced AML strategies. “Implementing these improvements in AML strategy will be onerous, but once in place, Hong Kong will be well on its way to becoming a leader in AI for AML, and preserving its economy from financial crime,” the report emphasized.
In contrast, Italy’s top ranking is attributed to its “low compliance costs and minimal GDP losses from money laundering.” Napier AI suggested that the country “should continue to succeed as it makes steps towards AI guidance.”
Napier AI, a rapidly expanding firm in Europe specializing in regulatory technology, recently raised £45 million ($58.5 million) to support its growth.
By fLEXI tEAM
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