SPACES FOR CHANGE | S4C joined private sector and civil society representatives, head of government delegations, financial institutions, the academia, and financial crime control experts from around the world at the just-concluded Financial Action Task Force (FATF)’s Private Sector Collaborative Forum (PSCF) organized by the Reserve Bank of India and the Ministry of Finance. Beyond encouraging public-private cooperation, the PSCF proceeds upon the premise that the private sector plays a very important role in keeping financial systems secure, especially by helping governments destroy illicit financial networks.
Held in Mumbai, India, this is the first time FATF’s Private Sector Collaborative Forum has been held outside Europe. FATF President, Elisa de Anda Madrazo, acknowledged that India represents emerging economies, and the global south, and has a lot to contribute to the digital economy of the world. Welcoming delegates to the conference, she highlighted the steps FATF has taken under her watch to strengthen global financial systems such as updating the standards on Recommendation 1; undertaking the first and second round of consultations on Recommendations 16 on payment transparency; finalizing two global reports on terrorist financing and proliferation sanctions; issuing a report on online child sexual exploitation (also known as sextortion); assessing the implementation of the FATF Standards, including shortening the assessments and the frequency at which they take place etc.
FATF is currently revising the digital payment requirements espoused in Recommendation 16 and its Interpretive Note (INR.16), hence the second round of consultations to understand the potential side effects of the revisions on businesses, humanitarian services and the wider private sector. Stakeholders broadly discussed the proposed revisions to R.16 and the potential implications they would have on cross-border payments, informal economies, humanitarian access, data privacy and financial inclusion. It is hoped that these contributions will inform future decisions of the FATF regarding the model of implementation of the revised standards.
PSCF2025 was indeed, very engaging, inclusive and diverse, featuring civil society voices across panels. S4C’s director spoke during the third panel focusing on humanitarian channels alongside other speakers: Cherise Chadwick of the Norwegian Refugee Council, Helène Erftemeijer of the Dutch Banking Association and Melissa TULLIS of UNODC plus our excellent moderator, Gonçalo Maia Miranda, President of the Executive Committee of the Portuguese AML/CFT Coordination Commission, Banco de Portugal. Sharing evidence from Nigeria and West Africa, S4C highlighted some of the positive impacts witnessed in the subregion since the revision of R.8 and R.1. These impacts range from a better understanding of R.8 and the risk-based approach, the delisting of NPOs as obliged reporting entities, legal reforms, sectoral risk assessments, establishment of platform for dialogues between non-profit organizations (NPOs) and financial institutions (FIs) to address financial exclusion challenges NPOs face, cross-national learning exchanges among NPOs and cross-national learning exchanges with governments in West Africa. Challenges for NPOs, arising from the implementation of CFT measures, still remain and were highlighted.
What happens when regulatory frameworks get in the way of humanitarian work? Norwegian Refugee Council highlighted the need to address the continued zero-risk approach of supervisors. Further, FATF R.5 and R.6 should be revised to reflect the recent global commitment to humanitarian exemptions: this will help States meet both their AML/CFT obligations as well as their obligations under International Humanitarian Law. States should be evaluated as non-compliant with the FATF standards if they overcomply or misuse the Recommendations to restrict civil society space. Human Security Collective advocated for the reconceptualization of risks. The much-touted risk-based approach (RBA) is resource-intensive, placing undue burdens on smaller organizations. The politics of risks is often abstracted from the science of risks. It focuses on adding layers and layers of measures without addressing the root causes and systemic causes of risks. That is why risk recalibration of the RBA, from the regulated to the regulator, should be considered. These issues were further explored at a side event organized by the NPO Global Coalition on FATF on the sidelines of the PSCF.
Another issue that dominated the discussions at the PSCF is the role of technology in either facilitating or curbing financial crimes. While technology has facilitated the ease and speed of doing business, it has also enabled illicit financial flows and activities. For example, fraud is perpetrated on online platforms involving internet service providers, gaming apps and mobile phones. In countries like India, telecommunication companies are now part of the AML/CFT framework helping to curb cybercrimes. Robust discussions centered around new technologies such blockchain technology, fintech solutions by international money service providers, and crypto and other technological products trying to stymie law enforcement through a web of intrigues, deceit and complex schemes. To curb these crimes, governments cannot do this alone. The essence of the PSCF is to leverage the partnerships with civil society and the private sector to explore solutions to these complex problems threatening the integrity of financial systems.
The highpoint of the PSCF is the session on “Women in AML” which aims to increase diversity by addressing the leaky pipelines of less female participation in the anti-money laundering (AML) discourse. It recognises that women are not going up in the chain of AML/CFT decision-making because of many factors especially motherhood. Significant progress has been recorded as many private and public institutions are now taking incremental steps to close the leaky pipelines. Today, women are now heads of compliance units at the world’s biggest financial institutions. Also, AML dialogues that were previously male-dominated are now featuring the participation and voices of more women. Women bring a mix of skills to the board room such as intuition, negotiation, compassion, empathy, critical thinking, multitasking, mediation etc. All these skills are necessary for cubing financial crimes. One point stressed is the importance of male allies as institutions work towards creating specific systems to facilitate the development of female AML leaders.
The main takeaway from PSCF 2025 is that risk is not going away. It is rather evolving and changing. As efforts are intensified to make financial systems safe and secure, policymakers need to ensure that measures do not stifle legitimate business and charitable activities. As one of the speakers cautioned, multiple regulations place burdens on the private sector. That’s why making policy must be precise, balanced and surgically-designed. The risk-based approach must be designed to target only illegitimate financial activities. In fact, regulations should not create barriers to financial inclusion.
