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Overview Financial Action Task Force (FATF) Relationship between AML/CFT & financial inclusion FATF Response Financial Inclusion & the risk-based approach Implementation of the standards Ongoing work Geneva, Switzerland, 4 December 2014 2 Financial Action Task Force (FATF) Inter-governmental policy-making body: Members: 34 countries + 2 organisations 8 FATF-style regional bodies (FSRBs) Sets the international standards for anti-money laundering, counter-terrorist financing (AML/CFT) and combating proliferation financing Core activities: Standard setting (FATF 40 Recommendations) Assessing compliance Identify and respond to threats: high risk jurisdictions and typology studies Over 190 countries have endorsed the FATF Standards Geneva, Switzerland, 4 December 2014 3 AML/CFT & Financial Inclusion Protecting the integrity of the global financial system requires that the largest possible range of transactions falls within the AML/CFT system. Financial Exclusion can increase the ML/TF risks e.g. excluded people use unregulated financial channels, creating a disguise for illicit funds. Geneva, Switzerland, 4 December 2014 4 AML/CFT & Financial Inclusion An overly cautious approach to AML/CFT safeguards can lead to: The exclusion of legitimate businesses and consumers from the formal financial system Disproportionate costs of AML/CFT compliance with regard to the expected return Geneva, Switzerland, 4 December 2014 5 FATF Response FATF Recommendations support the risk-based approach (RBA). Methodology considers financial inclusion through risk & effectiveness FATF has issued Guidance on: Financial inclusion (2013) New Payment Products & Services (2013) RBA Guidance for banking sector (2014) FATF statement on risk-based approach: case-by- case, not wholesale de-risking (October 2014) Geneva, Switzerland, 4 December 2014 6
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