Emergency Disbursements During COVID-19: Regulatory Tools for Rapid Account Opening and Oversight

23 Pages Posted: 25 Jul 2020

Date Written: July 20, 2020


More than 100 countries have launched emergency cash disbursement programs to alleviate financial hardships for individuals and households in light of the COVID-19 pandemic. Many of these programs are based in digital payments; however, a lack of official identification, mobile data services and the difficulties in face-to-face interactions restrict potential users from a standard customer due diligence process. Guidance from the Financial Action Task Force (FATF), the global anti-money laundering standards-setting body, encourage the use of innovative solutions for customer onboarding, specifically the risk-based approach and simplified due diligence (SDD). This paper summarizes the range of practice across jurisdictions that have employed a combination of SDD (also known as tiered CDD), licensing of non-bank financial institutions, and digital identification to enroll unbanked individuals into financial accounts so that they could receive COVID-19-related relief cash transfers. As this note concludes, jurisdictions that had adopted such practices were able to quickly ramp-up disbursement programs, bringing tens of millions of beneficiaries into the formal financial system.

This report provides an analysis of varied SDD implementations and provides considerations for financial regulators looking to promote appropriate risk mitigation while digitally delivering emergency financial assistance.

Keywords: Financial Inclusion, COVID-19, KYC, CDD, Account Opening, Disbursements

Suggested Citation

Kazzaz, Zachary, Emergency Disbursements During COVID-19: Regulatory Tools for Rapid Account Opening and Oversight (July 20, 2020). Available at SSRN: https://ssrn.com/abstract=3656651 or http://dx.doi.org/10.2139/ssrn.3656651

Zachary Kazzaz (Contact Author)

Glenbrook Partners ( email )

United States

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