The Financial Action Task Force (FATF) has released updated guidance aimed at aligning anti-money laundering (AML) and counter-terrorist financing (CTF) measures with global financial inclusion goals. This move marks a significant shift in regulatory thinking, signaling that effective AML enforcement should not come at the cost of excluding low-risk individuals and underserved communities from accessing essential financial services.
Traditionally, rigid AML requirements—especially around customer due diligence and identity verification—have made it difficult for vulnerable populations such as the unbanked, undocumented migrants, and low-income individuals to enter the formal financial system. FATF’s revised approach now emphasizes that simplified due diligence measures can and should be applied where the risk of money laundering or terrorism financing is demonstrably low. This ensures that institutions are not forced into a one-size-fits-all model but are empowered to apply proportional responses based on genuine risk assessments.
The updated guidance provides practical examples from around the world. In Sweden, for example, banks now allow asylum seekers to open basic accounts through digital verification in cooperation with immigration authorities. The Netherlands has introduced a model that categorizes customers and transactions by risk level, allowing for a more nuanced application of enhanced or simplified due diligence. Singapore has gone a step further by creating Limited Purpose Accounts for formerly incarcerated individuals, offering limited functionality but maintaining strong oversight.
One of the most significant changes is the clearer delineation of expectations around non-face-to-face customer onboarding, digital ID systems, and remote verification. FATF now formally recognizes that technology-driven solutions can both support financial inclusion and uphold AML standards—so long as the systems are reliable and based on solid risk evaluation.
The guidance also outlines how mutual evaluations conducted by FATF and regional bodies will increasingly examine whether countries are effectively balancing AML measures with inclusion goals. This means countries may no longer be rewarded solely for how strict their AML rules are, but also for how equitably and proportionately those rules are applied.
For financial institutions, the message is clear: review and adapt risk-based frameworks to recognize both the risks of money laundering and the risks of financial exclusion. Simplifying onboarding procedures for low-risk clients, using tiered account structures, embracing digital identity tools, and partnering with community groups will become essential components of a modern compliance strategy.
This new direction acknowledges that driving people out of the formal financial system can actually increase the likelihood of illicit activity, as individuals resort to informal or underground services. By contrast, bringing more people into the system—under proper oversight—strengthens overall transparency, traceability, and economic participation.
FATF’s refreshed guidance signals a move away from compliance through restriction and toward compliance through inclusion. In doing so, it challenges both regulators and institutions to rethink the purpose of financial regulation: not only to stop bad actors, but to ensure that good actors aren’t left behind.
