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This Policy Brief outlines recommendations for how the FATF can prioritise the protection and promotion of financial inclusion.
The FATF has committed to promoting financial inclusion via the proportionate implementation of its standards. The recent launch of a FATF project on unintended consequences, which includes a focus on financial exclusion, underlines that this commitment still requires attention. To date, beyond references to financial inclusion in the FATF Standards, methodology, guidance documents (on financial inclusion and related topics such as digital ID) and speeches, little concrete work has been done by the FATF to actively promote financial inclusion as part of its primary integrity man date.
This Policy Brief sets out five recommendations for how the FATF could refocus its framework so that it not only achieves its primary objective of effectively tackling financial crime but also actively promotes financial inclusion. Based on extensive research focused on three case study countries (see Appendix II for country profiles), a review of the existing literature and interviews with key stakeholders, the recommendations are as follows:
- Update FATF Recommendations 1, 2 and 10 to better promote compliance practices that enable financial inclusion.
- Update the FATF methodology to incorporate a recognition of financial inclusion as contributing to the effectiveness of a country’s anti-money-laundering and counterterrorist-financing regime.
- Strengthen FATF assessor training on financial inclusion.
- Measure the impact on financial inclusion of the International Cooperation Review Group process.
- ‘Walk the talk’ – ensure all stakeholders understand that promoting financial inclusion is key to the successful implementation of the FATF framework.
The FATF should address these recommendations by devising its own financial inclusion strategy that creates a roadmap for how it, along with the outcomes from its unintended consequences project, will be introduced and sustained over time.
This Policy Brief is supplemented by a RUSI Occasional Paper assessing the impact of the FATF on digital financial inclusion.
Related Occasional Paper
Associate Fellow; Former CFCS Senior Research Fellow, RUSI
Centre for Financial Crime and Security Studies