RUSI Calls On FATF to Devise Financial Inclusion Strategy

Little concrete work has been done by the FATF so far to actively promote financial inclusion as part of its primary integrity mandate.

RUSI (Royal United Services Institute) has published a policy brief outlining recommendations for how the FATF (Financial Action Task Force) 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 brief says, noting the recent launch of a project on the unintended consequences resulting from the incorrect implementation of the FATF Standards.

The project will focus on four areas, one of which is financial exclusion, a phenomenon whereby individuals are excluded from the formal financial system and denied access to basic financial services.

Despite the initiative, little concrete work has been done by the FATF so far to actively promote financial inclusion as part of its primary integrity mandate, the brief says.

The 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:

  • 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 AML/CTF regime.
  • Strengthen FATF assessor training on financial inclusion.
  • Measure the impact on financial inclusion of the International Cooperation Review Group process.
  • ‘Walk the talk’, i.e. ensure all stakeholders understand that promoting financial inclusion is key to the successful implementation of the FATF framework.

The brief says the FATF should address these recommendations by devising its own financial inclusion strategy and by creating a roadmap for how it will be introduced and sustained over time.

“The time for the FATF to make good on its commitment to promote financial inclusion through the proportionate implementation of its standards is ripe,” the brief says.

” As the group moves towards the fifth round of its mutual evaluations, this strategy could set out a vision for how the FATF can become synonymous with the curtailing of illicit finance while at the same time enabling licit finance –  ensuring that no one is left behind.”

The policy brief is available in full here.

The Policy Brief is supplemented by a RUSI Occasional Paper assessing the impact of the FATF on digital financial inclusion. 

The policy brief was written by Isabella Chase, Research Fellow, and Tom Keatinge, Director, at the Centre for Financial Crime and Security Studies at RUSI.

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