Navigating the Nexus of Financial Crime Prevention and Financial Inclusion in the Age of Technology and FinTech

<p dir="ltr">Key Points</p><ul><li>Illicit financial flows and rising compliance costs are major concerns in Asia and the Pacific, with $43 billion spent on financial crime compliance in 2023 and $700 billion lost to scams in 2024.</li><li>Stricter anti-money laundering regulations and regulations to combat the financing of terrorism are excluding vulnerable groups and micro, small, and medium-sized enterprises from financial services, highlighting the need for simplified due diligence and a risk-based approach to enhance financial inclusion.</li><li>Financial Action Task Force guidance on risk-based approaches lacks sufficient clarity, leading to inconsistent risk assessments and challenges in applying simplified due diligence for low-risk customers.</li><li>Fintech, RegTech, and SupTech offer opportunities to lower compliance costs and improve financial inclusion, but they also introduce new risks like identity fraud and misuse of advanced technologies.</li><li>Policy recommendations emphasize closer collaboration between regulators and technologists, clearer Financial Action Task Force guidance on financial inclusion, and stronger measures to address peer-to-peer, crypto, and virtual asset misuse.</li></ul><p></p>