FATF Framework Can Better Support Financial Inclusion: RUSI

There are insufficient incentives within the framework to ensure the FATF Standards are implemented in a way that supports inclusion.

A new paper from RUSI assessed the impact of the FATF framework on digital financial inclusion, saying that .

RUSI (Royal United Services Institute) has published a new paper outlining the effects the FATF (Financial Action Action Task Force) framework has on digital financial inclusion and financial inclusion more generally.

It says there are insufficient incentives within the framework to ensure the FATF Standards are implemented in a way that supports inclusion.

Despite tools being available within the framework that provide flexibility to support financial inclusion, there is limited guidance for entities for how to implement them.

The paper also says the Mutual Evaluation Report (MER) process has indirectly inhibited financial inclusion by failing to emphasise 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, the paper adds.

The paper also points to the impacts that FATF listings have on correspondent banking relationships, as well as the impact on national policymakers, the investment climate and remittances – and therefore financial inclusion.

The FATF framework could be used to better support financial inclusion, the paper says. However, without appropriate recognition, committed action and proper incentives, financial inclusion will continue to be overlooked.

The paper calls for more action from the FATF presidency, the FATF secretariat, the FSRB (FATF-Style Regional Bodies, e.g. the APG) secretariats, and other associated international bodies such as the World Bank 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.

The full paper is available here.

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

The paper was written by Isabella Chase, Research Fellow; Jonathan van der Valk, Research Analyst; and Tom Keatinge, Director, at the Centre for Financial Crime and Security Studies at RUSI.

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