Beschreibung:
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