[Dave Birch] I’m looking at the tension between financial inclusion and KYC/AML (financial exclusion), specifically in the context of launching new mobile payment schemes in developing countries. My thinking is summed up well here:

Strict KYC norms present a big hurdle: The very people who have most to gain from mobile banking are excluded because they don’t have identity cards, proof of address and other credentials.

One way to deal with this problem would be to allow “KYC- lite” that restricts the amounts per transaction to minimize risks while ensuring that the poor aren’t left out.

[From Bloomberg.com: Opinion]

I’ve argued before — in other fora — for a much stronger KYC/AML break at the low end of the market since it would provide a low-cost means to improve the lives of a large number of the poorest people. The main argument against this, naturally, is that the break might then be exploited by criminals, terrorists and so on. I don’t buy this at all, but do need to address it.

I’m curious as to whether all of the expenditure on KYC/AML makes the slightest difference to crime or terrorism. Can anyone point me to any reputable source of data that shows the crime reduction versus expenditure curve in this area? Are there any major terrorist incidents that have been averted? Have the authorities used KYC or AML effectively to catch major criminals (not just people like Elliott Spitzer).

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

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