Forging the link between inclusion and integrity in Ethiopia
June 14, 2015 Editor 0
How can financial inclusion and financial integrity policies complement each other? That question was addressed in a report recently released looking at the state of Ethiopia’s anti-money laundering/combating the financing of terrorism (AML/CFT) framework.
The assessment was conducted by a World Bank Group team of experts and published by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). This is the first assessment of a developing country to be published that uses the revised 2012 Financial Action Task Force (FATF) standards.
Ethiopia’s compliance with the international standards on AML/CFT had never been assessed before, and this report sheds light on the functioning of a unique and vibrant economy in Africa. In addition, this is the first AML/CFT assessment to highlight the connection between financial inclusion and financial integrity policies.
As noted in an earlier blog post, entitled “The Royal Stamp of Inclusion,” the FATF has confirmed that financial inclusion and financial integrity are mutually reinforcing public-policy objectives. The revised FATF standards have a more explicit focus on the risk-based approach in implementing an AML/CFT framework. This approach allows for the identification of lower risk scenarios and the application of simplified AML/CFT measures in certain areas (primarily customer due diligence, or CDD).
The Ethiopia assessment notes that only about 28 percent of the population is served by the formal financial system – leaving 72 percent of the population dependent on cash or informal financial service providers. The Ethiopian government has identified the expansion of formal financial services as a national priority, through its “Growth and Transformation Plan” and the “Ethiopian Financial Inclusion Project.”
The assessment makes suggestions as to how the Ethiopian authorities can “link up” the policies of inclusion and integrity – for example, by allowing for simplified customer due diligence processes, and by providing guidance to financial institutions on the issue.
- Financial Inclusion Targets and Transformational Change
- Turning the post office into a force for financial inclusion
- The Informationalization of Poverty in Africa? Mobile Phones and Economic Structure
- De-risking impedes access to finance for non-profit organizations
- SMEs are good business for Kenya’s growing banking sector
- The Gender Gap in Access to Finance
Categories: World Bank PSD
Subscribe to our stories
- Giving Francophone African incubators the keys to accelerate growth entrepreneurship February 13, 2018
- Is acceleration the panacea for scaling growth entrepreneurs? Reflections from XL Africa February 13, 2018
- Why providing pre-seed and seed capital is the essential step to bringing West Africa and Sahel’s entrepreneurs to the next level February 13, 2018
- Global Investment Competitiveness: New Insights on FDI February 2, 2018
- BioInnovate Africa phase II launched February 2, 2018