> Posted by Anita Gardeva
Word of the week – AML/CFT: An acronym for Anti-Money Laundering/Combating the Financing of Terrorism; policies to detect and reduce money laudering and terrorism financing.
The term usually refers to the international standards on AML/CFT set up by the Financial Action Task Force (FATF), an inter-governmental body. While each country can choose how to adapt these international standards, in most countries financial institutions are required to apply certain know your customer (KYC) regulations to all customers, strengthen internal controls, and watch for suspicious transactions. These regulations, while important, can sometimes create barriers to financial inclusion.
Spotlight Fact: AML/CFT regulation can make it especially difficult and costly to provide specific payment services to low-income people. The Center for Global Development’s Task force on Access to Financial Services cites Indonesia, Pakistan, Kenya, South Africa, and Mexico as examples where, prior to reforms, AML/CFT controls had unintended negative impacts on access and use of financial services by low-income people.
Suggested Resource: AML/CFT: Strengthening Financial Inclusion and Integrity
For more financial inclusion terms, visit the Center’s interactive Financial Inclusion Glossary.
For more information, sign up for updates from the Financial Inclusion 2020 campaign.
Flickr credit: borman818