The Financial Action Task Force (FATF) has published a revised version of its guidance on anti-money laundering (AML) and counter-terrorist financing (CFT) measures and financial inclusion.
The objective of the revised guidance is to encourage countries to implement the FATF Recommendations and the risk-based approach (RBA) in a way that responds to the need to bring the financially excluded into the regulated financial sector, while at the same time maintaining effective safeguards and controls against money laundering (ML) / terrorist financing (TF) risks. It focuses on initiatives to support access to and use of basic financial services and products for low income, unserved or underserved natural persons / individuals, which are generally limited purpose or restricted use products or services. Those products and services may: (i) be exempted from some AML / CFT controls based on proven low risks; (ii) benefit from a simplified due diligence regime, based on evidence of lower risks; or (iii) be submitted to standard customer due diligence supported by the use of new or alternative forms of identity documentation, including digital solutions.
The revised guidance discusses assessing the ML / TF risks relevant to financial inclusion products and services. It also highlights the risk mitigation measures, commensurate to the level and nature of risks identified, which financial institutions should apply to mitigate the risks. The revised guidance also presents different customer due diligence approaches which can be implemented to facilitate financial inclusion and remove obstacles linked to the verification of the customer’s identity, either a broad understanding of the reliable and independent source of information, or simplified due diligence measures. It specifically looks at measures adopted recently by a number of countries to accommodate the specific needs of undocumented migrants and refugees. It also focuses on digital financial inclusion and underlines some specific solutions implemented to address customer identification challenges.