5 days ago
FATF norms endorse India's institutional mechanisms like JAM
The Financial Action Task Force's (FATF) new guidelines on financial inclusion have extensively endorsed India's institutional mechanisms such as Jan-Dhan, Aadhaar and Mobile (JAM) Trinity, as well as digital stacks, customers due diligence, and Financial Stability and Development Council (FSDC), emphasising that financial inclusion and the fight against financial crime are mutually supportive. India's electronic know-your-customer (KYC) support via Aadhaar is a 'good' example, FATF said. (HT Archive)
The new guidelines cited India's financial inclusion efforts through digital identification and biometric data registries.
'In India, a multi-pronged approach to promote financial inclusion and promote transactions through financial channels, called JAM Trinity, was developed based on three pillars: (1) access to financial services to the unbanked population, (2) biometric based identification for every citizen, and (3) the development of a digital payment ecosystem. As per the Global Findex, access to financial services increased from 35% of total population in 2011 to 53% in 2014 and to 80% in 2017,' the guidelines said.
India's electronic know-your-customer (KYC) support via Aadhaar is a 'good' example of collaborative measures that lower compliance costs for regulated entities while improving the outcomes, the global body added.
The FATF updated its 'Guidance on Financial Inclusion and Anti-Money Laundering and Terrorist Financing Measures' after an extensive consultation with both the public and the private sectors. The guideline document was adopted by the global financial crimes watchdog at its June 2025 plenary.
Emphasising its risk-based approach as a facilitator of financial inclusion, FATF said that a country's anti-money laundering and countering the financing of terrorism (AML/CFT) legal framework should expressly allow for regulated entities to implement simplified measures where lower risks are identified, and should avoid making the framework overly prescriptive or stringent.
Highlighting India's frameworks, FATF said, the country created a solid institutional framework to coordinate and support its financial inclusion strategy. 'The National Strategy for Financial Inclusion for India 2019-2024 provides (1) an analysis of the status and constraints in financial inclusion in India, (2) specific financial inclusion goals, (3) a strategy to reach the goals, and (4) mechanisms to measure progress,' it added. The strategy, prepared by the Reserve Bank of India (RBI), reflects wide-ranging consultations with relevant stakeholders, it added.
Citing an example of India's 'solid institutional framework' to coordinate and support its financial inclusion strategy, FATF lauded the creation of FSDC — an apex body for inter-regulatory coordination of the financial sector, chaired by the Union finance minister. Its members include top bureaucrats and heads of financial sector regulators such as RBI and Securities and Exchange Board of India (Sebi), among others.
The FATF document also highlighted ease of compliance for customers in the Indian system. '…the country's CDD regime was flexible enough to accommodate financial inclusion and that the developments in e-KYC further reduced the need for relying on SDD [Simplified customer due diligence] practices,' it added.
