Implementing FATF Standards in Developing Countries and Financial Inclusion: Findings and Guidelines

This report considers the impact of the implementation of Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) controls on financial inclusion in five countries - Indonesia, Kenya, Mexico, Pakistan and South Africa. Key findings in the report include:

• Financial inclusion and an effective AML/CFT regime are complementary financial sector policy objectives;
• Imposition of AML/CFT controls have an impact on access and usage of financial services in the countries concerned;
• Countries are finding ways to limit AML/CFT risk while promoting financial inclusion.

Based on these findings, the paper develops a set of guidelines to assist authorities in developing countries to design effective AML/CFT regimes that are compliant with Financial Action Task Force (FATF) standards and support financial inclusion. These guidelines advise regulators to develop a suitable domestic financial sector policy, follow a consultative and flexible approach, assess and define risk and reduce control for lower-risk transactions.