Methodology for Assessing Money Laundering and Terrorist Financing Risks
Posted: June 15th, 2010 | viewed: (1,339) | Comments: ( 0 ) | Topic: Insight, Regulation |
mobile money services are emerging all over the world and financial regulators are unfamiliar with the money laundering and terrorist financing (ML/TF) risks arising from these new services. The current anti-money laundering and combating the financing of terrorism (AML/CFT) rules are often applied disproportionately to the risks involved, thus hampering the adoption of mobile money services amongst consumers, the poor in particular. It is, for example, disproportionate to put a high customer due diligence burden on very poor customers who are transacting very low amounts for legitimate reasons. Excessively strict ‘know your customer’ (KYC) rules can be impossible for the poor to comply with, keeping them locked into the informal economy without preventing ML/TF.
Proportionate rules ensure that AML/CFT rules are effective and that the benefits of mobile money services reach large parts of the unbanked population.
In the context of MMU, we believe that the time is right for a global discussion on how to apply rules aimed at preventing ML/TF through mobile money services proportionately. It is also important at the same time that regulators and industry alike develop as much awareness as possible about ML/TF risks at this early stage of service deployments so that any future risks can be anticipated and mitigated effectively.
Marina Solin and Andrew Zerzan have therefore published a ‘Methodology for Assessing Money Laundering and Terrorist Financing Risks’ which is based on the existing framework of Financial Action Task Force (FATF) recommendations.
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