Historically, some regulators worried that relaxing onboarding rules to support financial inclusion would weaken financial stability or increase anti-money laundering (AML) vulnerabilities. Modern supervisory frameworks address this concern through the Proportionality Principle. [1]
Applying Proportionality to Financial Oversight
The proportionality principle states that regulatory and supervisory requirements must match the actual risks posed by the institution or consumer segment:
  Customer Risk Tier |   Onboarding Compliance Level |   Operational System Access
---------------------+-------------------------------+-----------------------------------------
  Low-Risk Retail    | Simplified KYC / Identity check| Capped transaction limits; low-value wallet
  High-Value Issuer  | Enhanced Due Diligence (EDD)  | Full commercial infrastructure access

By allowing banks and fintech platforms to use simplified customer due diligence for low-value retail accounts, regulators can lower onboarding barriers for unbanked populations while maintaining strict oversight for high-value commercial transactions.
 
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