Money laundering control and suppression of financing of terrorism

Abstract

PurposeThe purpose of this paper is to explore the relationship between anti‐money laundering (“AML”) and combating of financing of terrorism (“CFT”) customer due diligence (“CDD”) measures in the financial services industry, and exclusion from financial services.Design/methodology/approachAn introduction to the concept of financial exclusion is provided as well as an overview of international AML/CFT CDD standards. The paper highlights a softening of national CDD measures in South Africa and the UK to lessen the impact on financial exclusion.FindingsCountries should consider the impact that CDD requirements may have on financial exclusion when they design their AML/CFT systems.Research limitations/implicationsMulti‐discilinary research is required to improve the understanding of the broader interaction between AML/CFT objectives, financial exclusion and economic development, especially in countries with a large informal economy.Practical implicationsCDD requirements may unnecessarily exacerbate financial exclusion if they are not formulated with care to reflect the reality of the particular country setting.Originality/valueThe paper offers insights into the international standards resulting to the identification of clients and the experiences in the UK and South Africa regarding the implementation of these standards on financial exclusion.