Developing countries have challenges with financial methods – Group

The Global South Dialogue on Economic Crime has said the much-improved Financial Action Task Force’s methodology still has challenges as its applicability has unintended consequences for developing countries.

According to a statement, a 2022 report authored by Dr Nkechikwu Azinge-Egbiri and Dr Kolawole Ebire, evaluated countries’ technical compliance and effectiveness based on the FATF’s 4th round of evaluations and explored the factors that determine the compliance outcomes of countries, including the influence of factors such as the FATF methodology, the composition of assessment experts and language.

A Founding member of GSDEC, Joy Malala, stated that the report was timely and demonstrated the challenges Global South countries faced with transplantation.

She said, “For instance, 2020 was a turning point for digital financial services across the globe as a result of the COVID-19 pandemic, yet it brought on challenges. The resulting FATF digital identities directive ushered to address the challenges associated with digital financial services is one developing country will struggle with due to the likely unintended consequences such as its exclusionary nature.

“Yet, I believe the FATF’s directive can be effectively adapted to the cybercrime landscape of these countries if carefully assessed. The impact of the digital identification rollout on vulnerable population segments needs to be explored on regional basis in order to maintain secure and inclusive provision of financial services. The report is timely and demonstrates the challenges Global South countries face with transplantation.”

The keynote speaker, Louis de Koker, of La Trobe University Australia, said “The Global South, through expert research findings, has a role to play to prevent the unintended consequences of the FATF standards.”

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