A Review of Transparency International's 2022 Corruption Perceptions Index and cleversoft's Country Risk Assessment Process

Transparency International recently issued the 2022 Corruption Perceptions Index (CPI). The index uses 13 independent data sources, with a scale ranging from zero (highly corrupt) to 100 (very clean). This year’s report clearly demonstrates that corruption continues to be a pervasive global issue. Despite ongoing efforts, the global average score of 43 out of 100 has remained unchanged for 11 consecutive years and of the 180 countries and territories evaluated, 122 nations scored below 50.

The top-scoring countries are those with well-functioning democracies and strong institutions, with Denmark leading the ranking with an enviable score of 90 followed by New Zealand, Norway, Singapore, Sweden, Switzerland, the Netherlands, Germany, Ireland and Luxembourg completing the this year’s top 10. At the other end of the spectrum, countries suffering from conflict or restricted personal and political freedoms tend to score the lowest with Somalia and Syria at the back of the pack scoring 13 and 12 respectively. Five countries have shown dramatic improvement in their scores namely Angola, Maldives, Vietnam, Moldova and South Korea, with 10 countries experiencing a significant decline including Austria, Luxembourg, and the UK. The majority of countries have shown no change in their corruption levels.

The COVID-19 pandemic, security concerns, and weakened democracy are impacting countries across regions in different ways. While Western Europe and the EU have traditionally scored high, progress has been stagnant in most countries and the region's average score of 66 may be at risk due to the changing security landscape and the possibility of a looming recession.

In the Americas, the lack of decisive action to fight corruption has led to an average score of 43 for the fourth consecutive year, exacerbating organized crime and weakening democracy and human rights. Asia Pacific has similarly stagnated with an average score of 45, as rising authoritarianism and a focus on economic recovery have diluted the role of civil society as a watchdog. Eastern Europe and Central Asia have a cycle of corruption, with an average score of 35. High-level corruption is closely linked to political instability and weakened institutions. The COVID-19 pandemic has significantly impacted Sub-Saharan Africa, which remains the lowest-scoring region with an average score of 32.

All in all this was a disappointing report in light of the global drive for egalitarianism, fairness and cooperation, to cease unlawful practices and mutually progress towards a vision of ethical and exemplary conduct. A change may take time to materialize given global events causing worldwide instability and concern.

The CPI will inherently alter the perception of underperforming States which may result in an adjustment from a jurisdictional risk assessment standpoint.

The Corruption Perception Index is a key element of cleversoft’s process to assess country risks. Our Country risk assessment rates countries with 3 risk levels: Low, Medium, and High. The corruption Perception Index is the pivot indicator of the assessment. The 2022 Revision of the CPI index impacts our Country risks list as follows:

EU Grey list of countries having strategic deficiencies.

The EU must ensure an effective protection of the integrity and proper functioning of its financial system and the internal market from money laundering and terrorist financing. Hence, Directive (EU)2015/849 provides that the Commission should identify countries which present strategic deficiencies in their regimes on anti-money laundering and countering terrorist financing that pose significant threats to the financial system of the Union.

‍

The Commission should take into account in its assessments new information from international organizations and standard setters, such as those issued by the Financial Action Task Force (FATF). In ight of that information, the Commission should also identify additional countries presenting strategic deficiencies in their AML/CFT regime.

‍

In order to conduct its autonomous assessment, the Commission assessed available information from the FATF and, where appropriate, other sources of information to reach its conclusion.

‍

As such, this means that the EU list of countries having strategic deficiencies may differ from the FATF list of countries having strategic deficiencies and will be included as an additional source to be used in the country risk assessment. Every country listed on the EU list of countries having strategic deficiencies will be automatically rated high risk, which is the case already for the countries listed on the FATF list.

Corresponding EU official documents are listed here below:

· Directive (EU) 2015/849

· Delegated Regulation(EU) 2016/1675

· Delegated Regulation(EU) 2020/855

The inclusion of the EU list of countries with strategic deficiencies in our risk assessment process impacts our Country risks list as follows:

How does it impact you?

Our Country risks list is used in:

· AMLspotter,

· AMLspotter Online,

· WEB BNC,

· CleverKYC,

· API.

Other questions on the 2022 revision of the Corruption Perception Index/EU Grey list and how it is used in our AML solutions, please feel free to contact our support team.  

‍