The Financial Action Task Force Updates Its Guidance on Combining Financial Inclusion with Anti-Money Laundering and Terrorist Financing Measures

The updated guidance from the Financial Action Task Force (FATF) supports efforts to bring more individuals into the formal financial sector through a risk-based approach, which helps in combating illegal activities. The FATF also reinforced its Recommendation 1 earlier this year by encouraging countries to promote financial inclusion and ensuring that anti-money laundering (AML), counter-terrorist financing (CFT), and counter-proliferation financing (CPF) measures are implemented through a proportionate and risk-based process.

The update, which resulted from over 100 public feedback responses including contributions from civil society, academia, the private sector, and others, focuses on providing access to formal financial services for underserved groups. These include low-income individuals, rural communities, and those with difficult identification challenges or limited availability of suitable financial products.

Implementing these measures requires a risk-based approach that considers both the risks associated with financial exclusion and the benefits of integrating more people into regulated financial systems. This will allow for tailored service provision to those in need while applying enhanced controls in high-risk scenarios.

The FATF Guidance includes examples from countries like Sweden, Singapore, and the Netherlands, where risk-based approaches have been successfully implemented by supervisors, policymakers, and associations.