Financial Crime World

Inclusive Financial Integrity: A Global Imperative

A new report by the Financial Intelligence Centre (FIC) sheds light on the state of inclusive financial integrity in four countries: Namibia, Mongolia, Paraguay, and Sri Lanka.

Challenges Faced by Countries

The report highlights the challenges faced by these countries in promoting financial inclusion, with a focus on anti-money laundering (AML), combating the financing of terrorism (CFT), and countering the proliferation of weapons of mass destruction (WMD).

Success Stories and Struggles

Mongolia’s Success Story

Mongolia is one of the most notable success stories in this regard. The country exited the Financial Action Task Force (FATF) grey list in October 2020, after making significant enhancements to its AML-CFT framework. This achievement was recognized by the Asia-Pacific Group (APG), which upgraded Mongolia’s rating from non-compliant or partially compliant to largely compliant or above.

Paraguay’s Struggle

In contrast, Paraguay is still struggling to improve its financial inclusion landscape. According to a World Bank report, only 27% of adults in Paraguay have an account with a financial institution, down from 31% in 2017. Mobile money accounts, however, have seen an increase, with 38% of adults reporting having such an account.

Barriers to Financial Inclusion

The report identifies several barriers to financial inclusion, including:

  • A lack of money and documentation
  • Requirements to show proof of income and employment
  • These barriers disproportionately affect vulnerable groups, such as women and persons with disabilities

FATF Grey List Process

The FATF grey list process is designed to encourage countries to improve their AML-CFT frameworks. Countries placed on the list are given an action plan to implement, with a deadline of 18 months. Failure to make progress can result in a country being referred to the “blacklist,” which requires stronger counter-measures.

Conclusion

The report highlights the importance of inclusive financial integrity and the challenges faced by countries in promoting financial inclusion. Mongolia’s success story serves as a model for other countries, while Paraguay’s struggles underscore the need for sustained efforts to address barriers to financial inclusion. As global leaders, it is essential that we prioritize financial inclusion and work towards creating a more equitable and transparent financial system.

Recommendations

To promote inclusive financial integrity, the report makes several recommendations:

  • Enhance AML-CFT frameworks to prevent financial crime
  • Improve financial literacy and education to increase awareness of the benefits of financial inclusion
  • Implement policies to address barriers to financial inclusion, such as a lack of money and documentation
  • Strengthen regulatory frameworks to ensure effective supervision and monitoring of financial institutions

By implementing these recommendations, countries can promote inclusive financial integrity and create a more equitable financial system for all.