We developed a tool for the World Bank that helps decision makers in a country to assess the risk of money laundering in their country, identify critical vulnerabilities, and allocate resources to mitigate the risk.
We used a graphical modeling technique and developed a tool based on banking as well as legal experts that specified the complex relationships among the following sets of variables: country (governance, culture, regulations, law enforcement), industries/sectors (insurance, banking, casinos), money launderers (local and international proceeds), and the geopolitical environment. Using a probabilistic approach to assess vulnerabilities, threats, and risks, the web-based tool allows decision-makers to understand sources of vulnerability in the banking sector and to iteratively observe and analyze the effects of various policy options.
The World Bank client countries currently use the model to evaluate the risk of money laundering in their countries and decide on actions to strengthen their system. The project was awarded a 2012 World Bank/International Finance Corporation Financial & Private Sector Development award for innovation, responsiveness, and collaboration.