FATF Guidance on Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion

Financial Inclusion

Financial exclusion can affect both individuals and businesses, leading to various reasons such as poor credit rating or customer’s criminal background. To address this issue, countries may establish specific cases for exemptions in the application of FATF Recommendations based on proven low risks.

Key Points:

• Financial Exclusion: Affects individuals and businesses due to poor credit rating or customer’s criminal background.
• Proven Low-Risk Exemption: Countries can exempt certain cases from FATF recommendations based on proven low risks.

Risk-Based Supervision

The risk-based approach (RBA) aims to develop prevention or mitigation measures commensurate to the ML/TF risks identified. Supervisory authorities should allocate supervisory resources to areas of higher ML/TF risk based on understanding the ML/TF risk in their country.

Key Points:

• RBA to AML/CFT: Develops prevention or mitigation measures commensurate to ML/TF risks.
• Supervisory Authorities Allocation: Allocates supervisory resources to areas of higher ML/TF risk.

Guidance for Supervisors

FATF provides a general framework for the application of the RBA, while more detailed guidelines on implementation by supervisors can be found in additional resources. Supervisors may ask themselves self-assessment questions when reviewing their approach to RBA supervision. They should also consider additional sources of information such as the European Supervisory Authorities (2013) and Basel Committee on Banking Supervision’s Guidelines (2014).

Key Points:

• Additional Sources of Information: Report by the European Supervisory Authorities (2013) and Basel Committee on Banking Supervision’s Guidelines (2014).
• Self-Assessment Questions: Supervisors may ask themselves when reviewing their approach to RBA supervision.
• Implementation Guidelines: FATF provides a general framework for the application of the RBA.