Developing and Implementing AML/CFT Measures Using a Risk-Based Approach for New Payments Products and Services

Abstract

The use of new payment methods by the previously unbanked or underbanked holds out much hope for improved financial inclusion and consequently improved standards of living. It is important that new payment methods that enhance financial inclusion not be weighed down by overly burdensome regulation due to financial integrity concerns.

The Financial Action Taskforce (FATF), the global standards setting body for Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT), continues to work toward the objective of aligning financial integrity and financial inclusion objectives. To this end, FATF encourages countries and institutions to adopt proportionate regulations for AML/CFT purposes by providing greater clarity and understanding on the use of a risk-based approach to implementing AML/CFT measures for new payment methods.

Developing and implementing AML/CFT measures using a risk-based approach for new payment methods is still in the early stages of development. Countries and institutions need to be supported to be confident to embrace international efforts on proportional regulation and not be unduly conservative.

This paper analyses and explains FATF’s Risk-Based Approach (RBA) for new payment methods to support countries and institutions in their efforts to use a RBA to improve financial inclusion.