The real work begins after financial regulations are passed, says new FATF President

Why did you make financial inclusion one of your presidential term priorities, and what do you hope to achieve? 

Financial inclusion has always been both a personal passion and a professional priority of mine. As vital as they are, if they are miss-implemented, anti-money laundering and countering the financing of terrorism measures can have unintended consequences for financial inclusion and civil society, and our duty at the FATF is to make sure the rules are compatible with fundamental human rights.  

In the short term, I’d like to support members in updating the FATF’s Risk Based Approach, so it can guide countries in adopting simplified due diligence measures that encourage financial inclusion.  

In the long term, we need to create a stronger alignment between the FATF and financial inclusion bodies. We’ve spent a lot of time looking at our conflicting interests and how to manage them. I think it’s time to start focusing on our common interests and how to enhance each other’s work. We have the same goal: to build safe, secure, and more inclusive financial systems that serve the interests of the people.  

How can financial inclusion help efforts to combat money laundering and terrorist financing? 

The answer is simple: the safest space for money launderers and terrorist financers to hide is in the grey market and the informal sector. The more people are locked out of the formal economy, the bigger the playing field for bad actors to operate in. 

Bringing excluded people into the financial sector helps protect economies from illicit financial flows that fuel crimes like human trafficking, corruption, and drug trafficking. 

Part of our job as policymakers is to find ways to make risk management compatible with what’s good for us all collectively. It’s about finding a balance between integrity and inclusion. 

If you had one message to central banks and financial regulators, what would it be? 

We all need to pay more attention to practical implementation. We have the habit of thinking that our work is done once we’ve adopted a revision or passed legislation. But in truth, that’s when the real work begins.  

One example is supervision. 10 years ago, the FATF adopted a risk-based approach to encourage financial inclusion. The rules changed, but in many countries, the way those rules were applied stayed the same. Supervisors were still following the same old zero-failure regime in practice, despite a risk-based approach existing on paper.  

We can’t just change regulations. We need to change training, working practices and the enforcement decisions of supervisors, among others. Only sustained follow-up will ensure our work translates into real change.