In February 2025, the Financial Action Task Force (FATF) has convened its plenary session resulting in important updates to its global standards on countering money laundering (AML) and terrorism financing (CFT). These updates place a stronger emphasis on financial inclusion while ensuring effective risk-based compliance. Specifically, they refine Recommendation 1 and its Interpretive Notes to Recommendations 10 and 15, supporting proportionality in AML/CFT measures to ensure broader access to financial services without increasing risks.
A Shift Toward Proportionality in AML Compliance
With approximately 1.4 billion people worldwide still unbanked, FATF’s 2025 updates aim to make financial services more accessible by allowing simplified AML/CFT measures in lower-risk situations.
At the heart of these revisions is Recommendation 1, which now places greater emphasis on applying the risk-based approach (RBA) in a way that supports financial inclusion. The revised interpretive note explicitly recognizes that AML/CFT regulations should not unintentionally exclude legitimate users from financial services, particularly in lower-risk scenarios. This includes appointing an authority or system to assess risks and allocate resources efficiently. If a country identifies higher risks, it must take strong measures to address them. If the risks are lower, the country can apply lighter measures but must still fully enforce targeted financial sanctions as required by FATF.
Enhancements to Recommendations 10 and 15 seek to provide clearer guidance on customer due diligence (CDD) requirements and the use of digital financial services. These updates reflect real-world financial trends, such as the growing reliance on digital transactions and artificial intelligence in compliance processes.
Key changes include:
- Proportional application of AML/CFT measures ensuring that compliance does not unnecessarily hinder financial access.
- Explicit requirements for countries to allow simplified AML measures in lower-risk scenarios, encouraging jurisdictions to create enabling environments for financial inclusion.
- Clarification that non-face-to-face transactions are not automatically considered high-risk, provided that appropriate risk mitigation measures, such as digital identity verification, are in place.
- Guidance for supervisors to assess financial institutions’ risk mitigation strategies, ensuring that regulatory overcompliance does not restrict legitimate access to financial services.
These updates reinforce a risk-based approach that reduces barriers to financial participation while maintaining security and integrity in financial systems. Overall, the February 2025 updates strike a balance between compliance and accessibility. While maintaining robust AML/CFT safeguards, the FATF is now more explicitly recognizing the need for proportionate measures that do not unduly hinder financial access. This shift will give impulse to national regulators and financial institutions worldwide pushing them toward more innovative, inclusive, and risk-sensitive AML/CFT frameworks.
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Call for Input
FATF is conducting a public consultation to refine its guidance on AML/CFT measures and financial inclusion, focusing on updates to Recommendation 1. FATF seeks real-world case studies, practical examples, and specific drafting suggestions to ensure regulatory frameworks support both financial integrity and accessibility, particularly in higher-risk contexts such as conflict zones and non-face-to-face transactions. Financial institutions, regulators, non-profits, and industry experts are strongly urged to contribute their insights by the April 4, 2025 (18:00 CET) deadline, submitting feedback via email FATF.Publicconsultation@fatf-gafi.org to FATF. This is a key opportunity to shape global AML/CFT policies – stakeholder input is essential.
Technology’s Role in Strengthening Compliance and Financial Inclusion
FATF encourages financial institutions and regulators to integrate technology-driven solutions to improve AML/CFT compliance while expanding access to financial services. These include:
- AI-driven risk monitoring to detect suspicious activity while enabling more flexible due diligence for lower-risk cases.
- Automated identity verification using digital ID and e-KYC solutions to streamline customer onboarding.
- RegTech integration to improve AML reporting efficiency and reduce the compliance burden for financial institutions.
These digital innovations allow financial institutions to maintain compliance while simplifying access to financial services for underserved populations.
What These Changes Mean for Businesses and Regulators
The 2025 FATF updates signal an important shift in global AML/CFT compliance:
- Regulators must modernize AML frameworks to align with FATF’s focus on proportionality and financial inclusion.
- Financial institutions must refine AML strategies to ensure compliance does not become a barrier to financial access.
- Governments must create policies that balance financial integrity with inclusive financial ecosystems.
By enabling risk-based AML/CFT approaches, these updates help expand financial services while ensuring regulatory frameworks remain effective and responsive to evolving risks.
Let’s Talk About Your AML/CFT Strategy
Get in touch with NRD Companies to review your current AML approach and identify opportunities for alignment and innovation.
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Our team will review it and get back to you shortly. For urgent questions, you can reach us at connect@nrdcompanies.com.
How NRD Companies Can Help
As FATF introduces proportional AML/CFT measures to support financial inclusion, NRD Companies assists in the development and implementation of risk-based AML/CFT policies, ensuring that simplified due diligence measures are applied in low-risk scenarios while maintaining robust risk mitigation strategies.
Additionally, NRD Companies collaborates with governments and regulatory agencies to align national AML/CFT policies with FATF’s 2025 recommendations. Our expertise includes:
- Drafting legislative frameworks that support risk-based AML compliance.
- Designing implementation roadmaps for jurisdictions adapting to FATF’s financial inclusion guidelines.
- Providing technical guidance on digital AML/CFT solutions to enhance enforcement and oversight.
Need Help Navigating Simplified AML Measures?
Contact NRD Companies to explore how risk-based compliance can drive both integrity and inclusion in your financial ecosystem.
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Our team will review it and get back to you shortly. For urgent questions, you can reach us at connect@nrdcompanies.com.
Stay Ahead of FATF Compliance Requirements
The 2025 FATF updates emphasize the need for proportionality, risk-based compliance, and financial inclusion. NRD Companies delivers practical, technology-driven solutions to enhance AML/CFT frameworks while ensuring broader access to financial services.
Contact us to explore how we can support your compliance strategy and financial inclusion initiatives with tailored policy advisory and digital compliance solutions.
