The Financial Action Task Force (FATF) establishes global standards for anti-money laundering and counter-terrorist financing (AML/CFT). To prevent financial exclusion, FATF guidelines explicitly mandate a Risk-Based Approach (RBA). [1]

[Strict Identity Rules Block Users] ---> Drives Transactions into Informal Cash Spaces ---> Total Loss of Asset Visibility ---> High Systemic AML Risks

When regulatory onboarding rules are too rigid, they force low-income consumers out of the formal banking sector and into unmonitored cash-based markets. This shift destroys asset visibility for law enforcement. By implementing a risk-based approach with tiered identity requirements, regulators bring transactions into monitored digital ecosystems, improving financial integrity across the economy.