AML/CFT and Financial Inclusion: New Opportunities Emerge From Recent FATF Action

This focus note provides an overview of Financial Action Task Force (FATF) standards and guidance, highlighting the topics that are most relevant for financial inclusion policymaking. It states that financial inclusion and anti-money laundering and countering the financing of terrorism (AML/CFT) are now recognized as mutually supportive and complementary objectives. The note discusses opportunities and incentives for policy makers to adopt inclusion friendly AML/CFT regimes. It also suggests that applications of measures that enable more citizens to use formal financial services are likely to increase the reach and effectiveness of these AML/CFT regimes. The note covers the following sections in detail:

• Background on FATF and the revised FATF recommendations including areas of relevance to financial inclusion. These include financial service providers’ customer due diligence (CDD) practices, record-keeping and monitoring, remittances and other money transfer service obligations, and issues relating to agents playing roles in AML/CFT compliance;
• New AML/CFT compliance assessment methodology and financial inclusion implications of the revised methodology;
• New opportunities for countries to be proactive in developing financial inclusion-friendly AML/CFT regimes and foreseeable challenges countries working toward the same are likely to face.