Guidance for regulators, financial service providers and market facilitators

Globally, millions of people are excluded from accessing the formal financial services that meet their needs. This is at least partly due to the way the Financial Action Task Force (FATF) recommendations are implemented by countries, and customers needing to provide specific physical documents to be onboarded.

In sub-Saharan Africa, 17% of the adult population is excluded due to lack of documentation.  Particularly African countries are struggling to implement the FATF recommendations more broadly. Results from the FATF mutual evaluations show that the anti-money laundering and combatting the financing of terrorism (AML-CFT) frameworks in most African countries achieve a “low effectiveness” score, indicating that frameworks are not achieving the desired outcomes. COVID-19 has exacerbated these issues, as countries now need to find ways to ensure AML-CFT obligations are undertaken remotely, while also dealing with increased money laundering risks linked to COVID-19 relief packages.

In order to address the systemic as well as the immediate challenges associated with COVID-19, Cenfri and FSD Africa have developed a guidance note, targeted at regulators, financial service providers and market facilitators, that provides clear steps and actions to take in transitioning toward remote identity proofing. The guidance highlights how traditional modalities for customer due diligence (such as in-person know-your-customer) have never been appropriate for the risk-based approach, and that appropriately robust, digital modalities (i.e. remote identity proofing) have potential to serve both for short-term and long-term strategic objectives.

Cenfri is conducting ongoing technical assistance with regulators and financial service providers around these issues. This initiative aims to provide guidance to various market players regarding specific steps they can take to transition towards appropriate CDD practices that are aligned with the FATF. This will address systemic challenges in the market that have been exacerbated by COVID-19. To get in touch with us, contact Barry Cooper.