Aligning financial inclusion and financial integrity

Thu Thi Hoai Tran and Louis De Koker

Journal of Money Laundering Control, 2019, vol. 22, issue 4, 595-613

Abstract: Purpose - This study aims to consider the anti-money laundering/combating of financing of terrorism (AML/CFT) regime that applies to microfinance institutions (MFIs) and microfinance programmes and projects (MFPs) in Vietnam to identify ways in which to improve the alignment between financial inclusion and financial integrity objectives in relation to this sector. Design/methodology/approach - This doctrinal study is informed by the Financial Action Task Force mutual evaluation methodology. Findings - The AML/CFT regulatory framework for MFIs/MFPs is inadequate but improving. The money laundering and terrorist financing risks posed by microfinance are low and so is the capacity of many providers to comply with AML/CFT obligations. Given the low risk, there is space to simplify AML/CFT requirements for this sector in a manner that will better align financial inclusion and financial integrity policy objectives. Research limitations/implications - This paper considers the implementation of AML/CFT obligations of MFIs/MFPs based on existing studies as well as own research relating to compliance and supervisory practices. Further empirical studies to determine for the whole microfinance sector could provide a more granular understanding of crime risks and compliance capacities in the sector. Practical implications - AML/CFT regulators in Vietnam can take concrete steps to simplify the AML/CFT due diligence obligations of MFIs/MFPs and support these institutions to formalise and implement appropriate AML/CFT measures. Social implications - MFIs/MFPs play a vital socio-economic role by providing financial services to the poor. Appropriate AML/CFT control measures can enable these providers to continue providing these services while strengthening economic formalisation and integrity goals of the government. Originality/value - The paper provides novel supervisory perspectives on the AML/CFT regime in relation to MFIs/MFPs.

Keywords: Microfinance; Vietnam; Developing country; Financial inclusion; Risk-based approach; AML/CFT (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:jmlcpp:jmlc-01-2019-0004

DOI: 10.1108/JMLC-01-2019-0004

Access Statistics for this article

Journal of Money Laundering Control is currently edited by Dr Li Hong Xing and Prof Barry Rider

More articles in Journal of Money Laundering Control from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().