FATF Guidance on Anti-Money Laundering, Terrorist Financing Measures and Financial Inclusion
The FATF’s 2025 update on financial inclusion redefines how AML/CFT/CPF compliance and financial access must work hand in hand. Under the strengthened Recommendation 1, FATF now expects institutions and authorities to actively promote inclusion by using a risk-based approach (RBA) — ensuring that access to financial services is not denied purely due to documentation gaps or perceived risks, especially for underserved populations.
Why This Matters for Financial Institutions
From retail banks to investment firms, payment providers, insurers, and factoring companies, this guidance clarifies that:
- Financial exclusion is a systemic risk. It pushes low-risk individuals into the informal economy where illicit finance thrives.
- Proportionate AML/CFT controls not only reduce criminal misuse, but also enhance financial integrity and transparency.
Key Principles of the Updated Guidance
1. Proportionality in AML/CFT/CPF Controls
- Apply simplified due diligence (SDD) for low-risk groups.
- Avoid blanket exclusions where customers lack traditional documents.
- Use alternative identity verification (e.g. biometrics, migration authority confirmation).
2. Risk-Based Customer Categorization
- Segment customers into low, neutral, and high-risk groups.
- Tailor onboarding and monitoring accordingly — not every client requires enhanced due diligence.
3. Support for Vulnerable and Underserved Groups
- Includes low-income populations, rural communities, migrants, and ex-offenders.
- Aims to increase access to basic banking and insurance services.
International Best Practices
🇸🇪 Sweden
Banks partnered with the Migration Agency to validate asylum seekers‘ identities via a secure online confirmation — enabling access to basic accounts.
🇳🇱 Netherlands
The Dutch Banking Association defined a national baseline AML/CFT model with practical scenarios for low-, medium-, and high-risk customers.
🇸🇬 Singapore
Banks offer Limited Purpose Accounts for higher-risk individuals (e.g., ex-offenders), ensuring financial access with strong monitoring safeguards.
Operational Takeaways for Institutions
What You Should Do Now:
Update Risk Assessment Models
Incorporate financial exclusion risks and evaluate impact on your compliance controls.
Design Tiered Products
Offer low-risk products with simplified checks and gradually scale customer onboarding.
Engage with Regulators and Civil Society
Support inclusive policy discussions and build trust with underserved communities.
Train Staff on Inclusion-Linked AML Risks
Integrate new typologies and case studies into your compliance training.
Prepare for Enhanced Evaluations
FATF’s new assessment methodology focuses heavily on how institutions balance AML/CFT with inclusion.
Inclusion is Compliance
FATF’s message is clear — a well-run compliance function should enable access, not just deny risk. Financial institutions are encouraged to innovate responsibly, document decisions, and ensure that disadvantaged individuals are brought into the formal economy — all while strengthening AML/CFT frameworks.