FATF Guidance on AML/CFT measures and financial inclusion, with a supplement on customer due diligence

Buenos Aires, 3 November 2017 - Financial inclusion has always been important for the FATF.  Without access to the formal financial system, unserved or underserved customers will resort to cash and unregulated channels, which limits transparency and increases the risk of crime and money laundering.

The FATF recognises that applying an overly cautious approach to anti-money laundering and countering the financing of terrorism (AML/CFT) safeguards can have the unintended consequence of excluding legitimate businesses and consumers from the formal financial system.  In 2013, the FATF published the Guidance on AML/CFT Measures and Financial Inclusion, which provided support for designing AML/CFT measures that meet the goal of financial inclusion, without compromising their effectiveness in combating crime. The guidance explained how to apply the risk-based approach, reinforced in the 2012 Recommendations, in a financial inclusion context.    

One of the main obstacles to providing appropriate regulated financial services or products to unbanked customers is their lack of reliable identity documentation and data verification. Low income individuals or displaced persons such as refugees, often do not possess the proper identification documentation and are therefore not able to meet “traditional” customer due diligence requirements.  The risk-based approach allows for a certain amount of flexibility to provide access to basic, regulated financial products to a larger proportion of the population.

This 2017 supplement to the 2013 guidance provides country examples of customer due diligence measures adapted to the context of financial inclusion. Those examples illustrate how a simplified set of CDD measures or alternative forms of identity verification, for example the use of e-identity tools, can support financial inclusion, while appropriately mitigating the ML/TF risks. 

The objective of this updated report is to encourage countries to make use of the FATF Recommendations’ flexibility to provide sound financial services to the financially excluded.