Finance Against Slavery and Trafficking (FAST) Initiative
Para. 10: A great example is Mexico’s AML/CFT regulation for banks which establishes low risk deposit accounts with a risk-based approach to simplify due diligence requirements. These accounts are classified into three levels of operation with variations in service restrictions. They are subject to certain safeguards and use simplified due diligence to increase financial access for excluded groups, especially Level 1 and 2 basic bank deposit accounts.
• Level 1 deposit accounts can be opened in person or remotely only for natural persons, requires minimum identification data (full name and date of birth), and has a maximum account balance and monthly transactions.
• Level 2 deposit accounts can be opened in person or remotely only for natural persons, requires basic identification, and has maximum monthly transactions.
• Data (In person): full name, without abbreviations, date of birth and address obtained from a current supporting identification document. Banks may accept other types of ID documents to open accounts for Mexican teenagers, repatriated Mexican citizens, and refugees.
• Data (Remote): full name without abbreviations, gender, entity of birth, date of birth, as well as their address.
• Level 3 deposit accounts can be opened only in person for natural or legal persons, require full identification data obtained from current supporting documentation, and have a maximum monthly transaction and account balance.
We recommend the EBA to consider following a similar approach.
Para. 18 (b): it is stipulated that “To effectively manage ML/TF risk associated with a customer, monitoring should at least include […] ensuring that the customer’s account is reviewed regularly to understand whether changes to the customer’s risk profile are justified.” While a regular risk-based update of customer data is sensible, the requirement for a regular review of the account should be deleted. Account reviews of vulnerable customers should only be conducted within the framework of risk-based transaction monitoring and when specific transaction alerts are present. Otherwise, the opening of accounts for vulnerable populations would always be accompanied by an abstract review requirement, which would place additional burdens (of time and effort) on financial institutions and increase personnel costs. Such additional burdens are precisely why financial institutions take de-risking decisions in the first place.
Para. 21: In addition to the risk mitigating measures listed, we suggest that accounts be opened that only allow deposits by a specific counterpart, i.e., the social service agency that disburses aid to refugees.
Additional comments on section “Accompanying documents” can be read in the attachment.