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RUSI has called out the FATF for not actively promoting financial inclusion as part of its primary integrity mandate.
The Royal United Services Institute, abbreviated as RUSI, has introduced a policy brief that outlines recommendations for the Financial Action Task Force (FATF). The recommendations refer to the steps the FATF can take to prioritize the protection and promotion of financial inclusion.
Recently, the FATF began a project to find more about the “unintended consequences resulting from the incorrect implementation of the FATF standards”.
The project aims to focus on four key areas, one of which includes financial exclusion – the phenomenon where individuals are denied access to financial services as they are excluded from the financial system.
While this is a step in the right direction, RUSI believes that the FATF has done little to no work to actively promote financial inclusion.
In the brief published, five recommendations have been laid out for how the FATF could refocus not only on financial inclusion but also on combatting financial crimes. These recommendations are listed below:
- Update the FATF Recommendations 1, 2 and 10 to better promote compliance practices that enable financial inclusion.
- Update the FATF methodology to incorporate 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 states that the FATF needs to devise its own financial inclusion strategy by creating a roadmap of how it can be introduced, achieved, 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.
It goes on to say:
“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.”
Suggested Read: RegTech: The Case for Financial Inclusion