Download Geneva, Switzerland, 4 December 2014

ITU Workshop on
“Digital Financial Services and Financial Inclusion”
(Geneva, Switzerland, 4 December 2014)
AML/CFT & Financial Inclusion
Timothy Goodrick,
Policy Analyst, Financial Action
Task Force (FATF)
[email protected]
Geneva, Switzerland, 4 December 2014
Overview
Financial Action Task Force (FATF)
Relationship between AML/CFT &
financial inclusion
FATF Response
Financial Inclusion & the risk-based
approach
Implementation of the standards
Ongoing work
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Financial Action Task Force (FATF)
Inter-governmental policy-making body:
Members: 34 countries + 2 organisations
8 FATF-style regional bodies (FSRBs)
Sets the international standards for anti-money
laundering, counter-terrorist financing (AML/CFT)
and combating proliferation financing
Core activities:
Standard setting (FATF 40 Recommendations)
Assessing compliance
Identify and respond to threats: high risk
jurisdictions and typology studies
Over 190 countries have endorsed the FATF
Standards
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AML/CFT & Financial Inclusion
Protecting the integrity of the global
financial system requires that the
largest possible range of transactions
falls within the AML/CFT system.
Financial Exclusion can increase the
ML/TF risks
e.g. excluded people use unregulated
financial channels, creating a disguise
for illicit funds.
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AML/CFT & Financial Inclusion
An overly cautious approach to
AML/CFT safeguards can lead to:
The exclusion of legitimate
businesses and consumers from
the formal financial system
Disproportionate costs of AML/CFT
compliance with regard to the
expected return
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FATF Response
FATF Recommendations support the riskbased approach (RBA).
Methodology considers financial inclusion
through risk & effectiveness
FATF has issued Guidance on:
Financial inclusion (2013)
New Payment Products & Services (2013)
RBA Guidance for banking sector (2014)
FATF statement on risk-based approach:
case-by-case, not wholesale de-risking
(October 2014)
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Risk-based approach (RBA)
FATF Recommendations require countries to
understand risks and apply a RBA, including
simplified measures where the risks are lower
Financial inclusion measures can be used in
low-risk situations (or as part of a strategy to
reduce the risks)
However, there needs to be balance-risks must
be understood by countries and institutions:
Risk can be increased by disproportionate
measures to encourage inclusion.
Newly banked people cannot be classified as
lower risks solely on the basis that they are
low-income clients.
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Implementation of the standards
FATF 4th round of mutual evaluations
First reports to be published in 2014
Focus on effectiveness
FATF mutual evaluations may
address financial inclusion on a case
by case basis
Financial exclusion may be a risk factor
that should be taken into account
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Ongoing work
Mutual Evaluations – undertaken by
the FATF & the FATF-regional style
bodies
Training of assessors – includes
financial inclusion module
Guidance for providers of money or
value transfer services (MVTS) – to
be revised in 2015-16
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