Excessive anti-money laundering regulation slows financial inclusion; little criminal action

The over-regulation that exists regarding the prevention of money laundering (PLD) and financing of terrorism for the financial system, can generate different negative effects, such as the brake on financial inclusion in a country where nearly half of the population does not have access to formal financial services, according to an analysis by the Financial Studies Foundation (Fundef).

According to Fundef’s analysis of the regulation that exists in the financial system, there is a challenge for the authority to eliminate regulatory arbitrations on the matter and that affect different intermediaries in the financial system.

“Having increasing regulation of PLD as a mechanism to mitigate the lack of effectiveness in the application of the law is very onerous for the country. A relevant impact is that (regulation) slows down financial inclusion ”, it can be read in the analysis.

The study abounds in the fact that it is necessary to refine some aspects regarding the issue of prevention of money laundering and terrorist financing, for example, to review the rules of specific intermediaries that carry out higher risk activities and that do not have such a detailed regime, like exchange centers.

Likewise, it suggests a homologation of the anti-laundering rules for those intermediaries who are participants in the system of means of payment. “For example, all those intermediaries that are a gateway to operate SPEI (Interbank Electronic Payment System) or CoDi (digital collection) must have the same end customer identification standard.”

According to the analysis, in the latest evaluation of the Financial Action Task Force (FATF) against money laundering in Mexico, it pointed out the low number of cases detected by the authorities, which indicates that there are deficiencies in the process of detecting evidence money laundering.

In this context, the study notes that it is necessary to improve the operational capacity in institutions, for example, migrate from manual operations and traditional systems to the use of artificial intelligence tools.

“(It is required) to invest in redesigning information storage systems to have integrated databases that allow the use of modern tools,” the analysis details and adds that the use of new technological tools would allow rules such as the identification of people blocked in the financial system and the detection of unusual operations become more operational.

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