Assessing the Financial Action Task Force’s Impact on Digital Financial Inclusion

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This Occasional Paper assesses the extent to which the FATF framework has impacted digital financial inclusion.

This paper finds that the FATF framework has several effects on digital financial inclusion and financial inclusion more generally. Occurring at different stages of the FATF process, they can be summarised as follows:

  • The FATF Standards. The FATF Standards afford the necessary provisions and flexibility to support financial inclusion. However, this paper finds that despite the requisite tools being in place, there are insufficient incentives within the framework to ensure they are implemented in a way that supports inclusion. When entities do take advantage of these tools, the impact is impeded by limited guidance on how to implement them.
  • The Mutual Evaluation Report (MER) process. In theory, much like the FATF Standards, the MER process should not adversely impact financial inclusion. In practice, while the process has not directly harmed inclusion, it has indirectly inhibited it by failing to bolster the narrative that financial inclusion and the robust implementation of financial crime controls are mutually beneficial. Inconsistent treatment of financial inclusion in the MER process is worsened by the limited training assessors receive on the subject. 
  • FATF listing procedures. This paper supports previous studies that have found FATF listings have several impacts on financial inclusion. It upholds findings that the FATF impacts correspondent banking relationships, but also points to the significant repercussions for listed countries on national policymakers, the investment climate and remittances. It contends that better data is needed to validate these impacts.
  • The FATF governance structure. The role that the FATF presidency and wider governance structure plays in positioning financial inclusion within the FATF framework is often overlooked. The president, FATF and FSRB secretariats and other associated international bodies, such as the World Bank, play a vital role in setting the tone for how the FATF framework should be complied with. They must do more to ensure that all stakeholders understand that proper implementation of the FATF framework benefits financial inclusion and, as a result, a country’s financial integrity.


In sum, this paper finds that the FATF framework could be used to better support financial inclusion. However, without appropriate recognition, committed action and proper incentives to do so, financial inclusion will continue to be overlooked.

This paper is complemented by a Policy Brief, which makes policy recommendations for how the FATF can more actively promote financial inclusion in the future.

Related Policy Brief

Walk the Talk: How the Financial Action Task Force Can Prioritise Financial Inclusion


Isabella Chase

Associate Fellow; Former CFCS Senior Research Fellow, RUSI

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Jonathan van der Valk

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Tom Keatinge

Director, CFS

Centre for Finance and Security

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