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PurposeThe purpose of this paper is to identify key questions that should be addressed to enable the Financial Action Task Force (FATF) to provide guidance regarding the alignment of anti‐money laundering, combating of financing of terror and financial inclusion objectives.Design/methodology/approachThe paper draws on relevant research and documents of the FATF to identify questions that are relevant to consider when it formulates guidance regarding the alignment between financial integrity and financial inclusion objectives.FindingsThe FATF advises that its risk‐based approach enables countries and institutions to further financial inclusion. It is, however, not clear what the FATF means when its uses the terms “risk” and “low risk”. It is also unclear whether current proposals for financial inclusion regulatory models will necessarily limit money laundering as well as terror financing risks to levels that can be described as “low”. The FATF will need to clarify its own thinking regarding low money laundering and low terror financing risk before it will be able to provide clear guidance to national regulators and financial institutions.Originality/valueThis paper was drafted to inform current FATF discussions regarding guidance on financial inclusion. The questions are relevant to all stakeholders in financial regulation.
Purpose-The purpose of this paper is to explore the relationship between anti-money laundering ("AML") and combating of financing of terrorism ("CFT") customer due diligence ("CDD") measures in the financial services industry, and exclusion from financial services. Design/methodology/approach-An introduction to the concept of financial exclusion is provided as well as an overview of international AML/CFT CDD standards. The paper highlights a softening of national CDD measures in South Africa and the UK to lessen the impact on financial exclusion. Findings-Countries should consider the impact that CDD requirements may have on financial exclusion when they design their AML/CFT systems. Research limitations/implications-Multi-discilinary research is required to improve the understanding of the broader interaction between AML/CFT objectives, financial exclusion and economic development, especially in countries with a large informal economy. Practical implications-CDD requirements may unnecessarily exacerbate financial exclusion if they are not formulated with care to reflect the reality of the particular country setting. Originality/value-The paper offers insights into the international standards resulting to the identification of clients and the experiences in the UK and South Africa regarding the implementation of these standards on financial exclusion. Countries, financial institutions and certain other businesses and professions are required to implement a set of anti-money laundering ("AML") and combating of financing of terrorism ("CFT") measures[1]. Many African countries are currently in the process of drafting or implementing AML/CFT laws. These laws must comply with international standards that
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