Distinguish exclusion from risk management
De-risking describes the restriction or end of customer relationships to avoid risk instead of managing it. This can affect whole categories of customers.
Financial inclusion concerns access to, and use of, formal financial services. FATF warns that overly cautious AML measures can exclude lawful customers.
Sources: FATF: Executive summary; FATF: Opening definition and case-by-case approach.
Use the evidence about the customer
FATF supports measures that match the assessed risk. Its guidance does not treat all excluded or underserved people as low risk.
The guidance is non-binding. Australian businesses must use the applicable Australian requirements. A financial inclusion objective does not create an exemption from those requirements.
Sources: FATF: Executive summary; FATF: Opening definition and case-by-case approach.
Separate missing documents from a final decision
A fictional customer cannot provide a standard identity document. The practice identifies the missing evidence and examines whether an applicable alternative identification procedure can be used.
It records the evidence, the customer circumstances and its decision. It does not assume that missing standard documents alone prove criminal activity.
This is a process example. It does not guarantee that the practice can complete CDD or provide the service.
Source: FATF: Executive summary: lack of identity evidence and proportionate measures.
- Missing document
Identify the evidence the customer cannot provide.
- Available procedure
Examine whether an applicable alternative identification procedure can be used.
- Decision
Record the evidence, circumstances and applicable duties.
Examine a missing document before deciding
Fictional process example. It does not guarantee completed CDD or permission to provide a service.
Follow the process from top to bottom.
Keep the legal conditions
Simplified CDD has conditions. Under section 31, the customer risk must be low, section 32 must not apply, and the Rules requirements must be met.
Use the detailed CDD articles for those conditions. An individual decision can still result in refusal when the business cannot lawfully provide the service.