Update of FATF recommendations to better support financial inclusion (February 2025)

FATF (2012-2025), International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation, FATF, Paris, France, http://www.fatf-gafi.org/en/pu...

On 25 February 2025, the Financial Action Task Force (FATF) updated its standards, following a public consultation and approval at its Plenary from 19 to 21 February 2025.

Revisions to Recommendation 1 (R.1), the Interpretative Notes to Recommendations (INR) 1, 10 and 15, the introduction and the glossary are "related to the riskbased approach to increase focus on proportionality of measures and require countries to allow andencourage simplified measures in lower risk areas", in order to better support financial inclusion.

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Changes

• Replacement of the term “commensurate” with “proportionate” (defined as a measure or action that appropriately corresponds to the level of identified risk and effectively mitigates the risks) throughout the Recommendations in order to provide clarity on how the concept should be applied in the context of a risk-based approach and align the FATF’s language more closely with that of financial inclusion stakeholders and frameworks. [R.1 and consequential amendments throughout the Standards]
• Explicit requirement for countries to allow and encourage simplified measures in lower risk scenarios. This induces clarity in the countries’ obligations in enabling simplified measures in their AML/CFT regimes, and further incentivises countries to be more active in advocating their implementation. [R.1 and consequential amendments throughout the Standards] Correspondingly, financial institutions and Designated Non-Financial Business and Professions (DNFBPs) are also required to consider differentiating their measures depending on the type and level of risks. [INR.1 paragraph 16]
• Requirement for supervisors to also review and take into account the risk mitigation measures undertaken by financial institutions and DNFBPs to avoid overcompliance resulting from an only partial understanding of associated risks, and to ensure that they are proportionately implementing their obligations. [INR.1 paragraph 9]
• Addition of qualifier to clarify that non-face-to-face business relationships and transactions would be considered as an example of potentially higher-risk situations only where appropriate risk mitigation measures have not been implemented. This amendment recognises that non-face-to-face interactions has become standard business practice in many countries and technological advancements in digital identity systems that may reduce the risks associated. [INR.10 paragraph 15]
• Further clarity in the requirements related to the application of simplified measures and exemptions in lower and low-risk scenarios respectively. [Throughout R.1 and INR.1]

Source FATF : https://www.fatf-gafi.org/cont...

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