Developments at two of the main global standard-setting bodies highlight the importance that these organizations are giving to financial inclusion.
The Guidance Paper is an update to the June 2011 FATF Guidance Paper on Financial Inclusion and AML/CFT measures. The updates give country authorities additional clarity on how to balance financial inclusion goals with AML/CFT measures.
During its Plenary, FATF also adopted the new Assessment Methodology for AML/CFT evaluations
, which evaluates whether a country is complying with FATF Standards
and whether its AML/CFT system is working effectively. Under the new assessment methodology, financial exclusion is now incorporated as one of the contextual factors for evaluators to consider in assessing the effectiveness of a country’s AML/CFT legal, regulatory and supervisory regime. This is a clear signal by FATF encouraging countries to implement measures to reduce levels of financial exclusion among their population.
In a separate development, the Basel Consultative Group (BCG), a forum of the Basel Committee on Banking Supervision
(BCBS) for deepening the Committee's engagement with supervisors around the world, launched a workstream on financial inclusion on February 14, 2013 in Basel. At the broadest level, the goal of the workstream is to gain a deeper understanding of the unique market features of inclusive finance within specific country contexts. The workstream’s objective is to address opportunities and challenges in proportionate prudential regulation and supervision of banks that directly serve base-of-the-pyramid customers. The workstream will explore the changing nature of risks to banking supervision that accompanies progress on financial inclusion. Two activities will be carried out in 2013. First, the workstream plans to conduct a range of practice survey on inclusive finance, similar to the 2008/09 survey conducted with Committee members on microfinance activities of banks and other deposit-taking institutions. Second, the workstream plans to update the 2010 Committee guidance Microfinance Activities and the Core Principles for Effective Banking Supervision
in light of the revised Basel Core Principles and the broader issues associated with financial inclusion.
The recent developments at both the BCBS/BCG and FATF are major milestones in providing support for supervisors in their pursuit of financial inclusion agendas alongside their core responsibility for protecting the safety, soundness and integrity of the banking sector and beyond.