AML/CFT Regulation : Implications for Financial Service Providers that Serve Low-Income People
Across the world, new measures are being introduced and existing measures tightened to combat money laundering and the financing of terrorism. All financial service providers, including those working with low-income communities, are-or will-be affe...
| Main Authors: | , , , |
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| Language: | English English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/497161468140979952/AML-CFT-regulation-Implications-for-financial-service-providers-that-serve-low-income-people http://hdl.handle.net/10986/36206 |
| Summary: | Across the world, new measures are being
introduced and existing measures tightened to combat money
laundering and the financing of terrorism. All financial
service providers, including those working with low-income
communities, are-or will-be affected by these measures. This
paper summarizes the implications of the international
framework for anti-money laundering (AML) and combating the
financing of terrorism (CFT) for financial service providers
working with low-income people. The international AML/CFT
standards developed by the Financial Action Task Force
(FATF), generally requires financial service providers to
enhance their internal controls to cater specifically for
AML/CFT risks; undertake customer due diligence procedures
on all new and existing clients; introduce heightened
surveillance of suspicious transactions and keep transaction
records for future verification; and report suspicious
transactions to national authorities. These measures could
bring additional costs of compliance to financial service
providers; and customer due diligence rules may restrict
formal financial services from reaching lower-income people.
The introduction of new or tightened AML/CFT regulations may
have the unintended and undesirable consequence of reducing
the access of low-income people to formal financial
services. As a means to avoid this outcome, this paper
argues in favor of (1) gradual implementation of new
measures; (2) the adoption of a risk-based approach to
regulation; and (3) the use of exemptions for low-risk
categories of transactions. |
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