RESTRICTED  
  
S/FIN/M/85  
 
3 August 2015  
(15-3993)  Page: 1/11  
Committee on Trade in Financial Services    
 
REPORT OF THE MEETING HELD ON 2 JUNE 2015 
NOTE BY THE SECRETARIAT1 
The Committee on Trade in Financial Services held a meeting on 2 June 2015 under the 
Chairmanship of Ms Maha Gabbani (Kingdom of Sa udi Arabia). The proposed agenda is contained 
in Airgram WTO/AIR/CTFS/2. An annotated agenda by the Chairperson had been issued 
on 27 May 2015 (JOB/SERV/209). The Committee adopted the agenda. 
1  ITEM A – ACCEPTANCE OF THE FIFTH PROTOCOL TO THE GATS 
1.1.  The Chairperson recalled that Brazil was the only Member that had yet to accept the 
Fifth Protocol.  
1.2.  The representative of Brazil said that there had been no developments. 
1.3.  The Committee took note of that statement an d decided to revert to this agenda item at the 
next meeting. 
2  ITEM B - REGULATORY ISSU ES IN FINANCIAL SERVICES  
2.1.  The Chairperson informed that the Secretaria t had been following up on participation by the 
IMF and the Islamic Financial Services Board (IFSB) at a meeting of the Committee, so as to 
complete the Committee's review of recent developments in global financial regulatory reform and their implications for trade in financial services. Unfortunately, neither the IMF nor the IFSB were 
able to attend this meeting. The Chairperson added that the Secretariat would try to secure their 
participation at a future meeting. 
2.2.  The Chairperson also said that following the decision by the Committee at the previous 
meeting, the Secretariat had invited the Glob al Forum on Transparency and Exchange of 
Information for Tax Purposes, and the Financial Action Task Force (FATF-GAFI), to make 
presentations before the Committee on the objectives  and purposes of both organizations, and on 
the latest developments in their respective ar eas of competence. Unfortunately, due to other 
unavoidable commitments, the Global Forum was unable to attend this meeting. The Chairperson 
added that the Secretariat will keep in touch with the Global Forum to ensure its participation at a future meeting.  
2.3.  She then introduced Ms. Valerie Schilling, Se nior Policy Analyst at the Financial Action Task 
Force. Ms. Schilling's presentation had been circulated as a room document. 
2.4.  The FATF representative said that th e FATF was an intergovernmental organization 
established in 1989 by the Ministers of its member jurisdictions. It was composed of 36 members 
(34 member jurisdictions and 2 regional organisations, namely the Gulf Cooperation Council and 
the European Commission). There were also 22 observers, including international organizations such as the Basel Committee on Banking Supervision, the International Association of Insurance 
Supervisors (IAIS), the International Organization of Securities Commissions (IOSCO), the IMF, 
                                               
1 This document has been prepared under the Secret ariat's own responsibility and is without prejudice 
to the positions of Members or to thei r rights and obligations under the WTO. S/FIN/M/85 
 
- 2 - 
 
  the OECD, the United Nations and the World Bank . The FATF network was also composed of 8 
FATF regional bodies, ensuring the coverage of over 190 jurisdictions across the world.  
2.5.  The objective of the FATF was to preserve th e integrity of the global financial system against 
money laundering, terrorist financing, and the proliferation of weapons of mass destruction. The 
FATF pursued its mandate through four types of actions: setting standards and assessing 
compliance; applying political pressure to improve compliance; conducting typologies studies of money laundering, terrorist financing and other illicit financing methods and trends; and 
responding to new and emerging threats. The latest version of the FATF standards (the 40 
Recommendations) was adopted by the FATF in 20 12, covering comprehensively a wide range of 
preventive measures, institutional requirements, enforcement and prosecution issues, sectorial controls, and obligations to achieve mutual legal assistance and international cooperation. The 
FATF process was extremely transparent – all th e standards, assessment reports, studies and 
other documents were all publicly available in the organization's website ( www.fatf-gafi.org ).  
2.6.  By its very nature, money laundering and the financing of terrorism were illegal activities. 
Rough estimates had been put forward to give some sense of the scale of the problem. The United 
Nations Office on Drugs and Crime (UNODC) conducted a study to determine the magnitude of illicit funds generated by drug trafficking and organised crimes and to investigate to what extent 
these funds are laundered. The report estimated that in 2009, criminal proceeds amounted to 
3.6% of global GDP, wi th 2.7% (or USD 1.6 trillion) being laundered. This was equivalent to the 
estimate made by the IMF in 1998 that the aggregate size of money laundering in the world could be somewhere between two and five percent of world GDP (somewhere between US$ 590 billion 
and US$ 1.5 trillion using 1998 statistics). 
2.7.  The basic objective of FATF work was to in crease the transparency of the financial system, 
making it more difficult for criminals and terrorists to move their funds without being detected. 
Increasing transparency of the financial system also contributed to other policy objectives, such as 
the promoting of international trade and financial incl usion. With regard to the latter, ensuring that 
financially excluded or underserved groups (suc h as low income, rural sector or undocumented 
groups) had access to regulated financial services helped strengthen the implementation of 
AML/CFT measures. In fact, in 2013, the FATF adopted specific guidance on AML/CFT measures and financial inclusion. 
2.8.  The FATF work was based, inter alia, on  the following elements: a risk-based approach; 
improved transparency so as to make it harder for criminals to conceal their identities and hide 
their assets (information on beneficial ownership); criminalization of money laundering, terrorist financing and other so-called predicate offences (the FATF identified 21 predicate offences); and 
more effective international cooperation throug h exchange of information, conduct of joint 
investigations, etc.  The FATF monitored countries' progress in implementing the FATF Recommendations; reviewed money laundering and terrorist financing techniques and counter-
measures; and promoted the adoption and implemen tation of the FATF Recommendations globally.  
2.9.  The risk-based approach was central to the effective implementation of the FATF 
Recommendations. A risk-based approach meant that countries, competent authorities, financial institutions and other designated non-financial businesses and professions (DNFBP) identified, 
assessed, and understood the money laundering and terrorist financing risk to which they were 
exposed, and took the appropriate mitigation meas ures in accordance with the level of risk. The 
approach was quite flexible and allowed for a more efficient use of resources, as financial 
institutions, DNFBP, countries and competent authorities could decide on the most effective way to 
mitigate the money laundering and terrorist financing risks they had identified, in line with FAFT Recommendation 1. This enabled them to focus their resources and take enhanced measures in 
situations where the risks are higher, apply simplified measures where the risks are lower and 
exempt proven low risk activities where appropriate.  
2.10.  The FATF conducted peer reviews of each member on an ongoing basis to assess levels of 
implementation of the FATF Recommendations, providing an in-depth description and analysis of 
each jurisdiction's framework for preventing crim inal abuse of the financial system. One important 
element of the FATF process was its Internatio nal Cooperation Review Group (ICRG) process, 
through which jurisdictions having significant deficiencies in their frameworks to combat money 
laundering and terrorist financing were publicly identified, so as to raise awareness of the risks of 
doing business with those jurisdictions.  S/FIN/M/85 
 
- 3 - 
 
  2.11.  The FATF Recommendations and Best Practices and Guidance helped countries implement 
targeted financial sanctions measures against terrorist financing and proliferation financing, as required by UN Security Council Resolutions. Th e FATF also worked closely with the IMF, who, 
when assessing the AML/CTF frameworks as part of the Reports on the Observance of Standards 
and Codes (ROSC) and the Financial Sector Assessment Programs (FSAP), used the FATF 
assessment methodology and procedures. The FATF also work in close coordination with the Global Forum, which was in the process of developing terms of reference for their next series of 
assessments. Indeed, the next round of reviews by  the Global Forum will focus on beneficial 
ownership to ensure that all countries have information regarding the beneficial ownership of entities operating in their jurisdictions. The FATF had adopted a definition of beneficial ownership more than 10 years ago. In that context, the FA TF had been working closely with the Global Forum 
to make sure that a similar to the issue of bene ficial ownership was adopted. She understood that 
the Global Forum had finally incorporated the FATF definition of beneficial ownership into its terms of reference. In addition, last year, the G20 adop ted High Level Principles on Beneficial Ownership 
Transparency which were consistent with the FATF standards on beneficial ownership and 
definition of beneficial owner .  
2.12.  The FATF work was also closely linked to prudential requirements. In fact, the FATF 
Recommendations made reference to the Core Principles issued by the three main standard-setting 
bodies (i.e. the Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision, the Objectives and Principles for Securities Regulation issued by IOSCO, and 
the Insurance Supervisory Principles issued by the IAIS), the reason being that the regulatory and 
supervisory measures that were applied for prudential purposes and which were also relevant to 
money laundering, should apply in a similar manner for anti-money laundering (AML) and combating the financing of terrorism (CFT). 
2.13.  The representative of Brazil said the pr esentation by the FATF as well as previous 
presentations by other international standard-setti ng bodies showed how the regulators' focus had 
been broadened to encompass not only the activities of financial institutions but also the activities 
of clients and consumers of financial services. For the sake of the integrity of the financial system, 
financial institutions were now considered co-responsible and co-liable for their clients' behaviour and activities. That expansion of the regulatory reach also emphasized the need for regulators to retain the maximum flexibility in order to be able to properly address these complex regulatory 
challenges and preserve the stability and integrity of the financial system. 
2.14.  The representative of Nigeria asked the FATF representative whether she could elaborate 
further on the challenges raised by corruption, asset recovery (including the STaR initative), and 
international cooperation.  
2.15.  The representative of Australia asked the FATF representative if she could develop further 
the issue of cooperation between the FATF and private banks.  
2.16.  The FATF representative turned first to the questions raised by Nigeria. She explained that 
the FATF had specific standards on financial secrecy which said that financial secrecy could not 
constitute an impediment to proper implementati on of anti-money laundering and counter terrorist 
financing measures. Because financial secrecy was one of the standards, the FATF was able to 
assess countries against it.  
2.17.  She also clarified that in the FATF contex t, the FATF Recommendations were its standards. 
However, because the FATF was not a treaty-based organization, its Recommendations did not 
carry the binding nature that the terms of a Co nvention would. The FATF  Recommendations were 
in fact "soft law", and were given effect by the hi gh-level political commitment of countries wishing 
to implement them, the transparent nature of the FATF’s assessment process and its ability to 
apply political pressure (including by issuing public statements) on countries not adequately 
complying with the FATF Recommendations.  
2.18.  She explained that the FATF also engaged with the St olen Asset Recovery (StAR) Initiative, 
a partnership between the World Bank and the United Nations Office on Drugs and Crime that 
supported international efforts to end safe havens for corrupt funds. The FATF had Recommendations on confiscation of assets and mutual legal assistance, thus contributing to asset 
recovery in an international context. S/FIN/M/85 
 
- 4 - 
 
  2.19.  The FATF attached a great importance to the fight against corruption, as corruption 
generated significant volumes of illicit proceeds and therefore was a predicate offence for money laundering. The FATF focused on the problem of corruption in the framework of its work on combating money laundering and terrorist financing, and engaged actively with the G20 Anti-
Corruption Working Group (ACWG). Although corru ption and money laundering were intrinsically 
linked, it was necessary to break down the silos between anti-money laundering authorities and anti-corruption authorities. So about four years ago, the FATF and the G20 ACWG convened the 
first experts meeting on corruption, as a platform  for the exchange of views between anti-money 
laundering and anti-corruption experts, policy makers and international standard setters and 
assessment/monitoring bodies. The FATF Recommendations were designed to combat money laundering and terrorist financing, but when effect ively implemented they could also help combat 
corruption, by safeguarding the integrity of the public sector; protecting private sector institutions 
from abuse; increasing transparency of the fi nancial system; and facilitating the detection, 
investigation and prosecution of corruption and money laundering, and the recovery of stolen 
assets. 
2.20.  Turning to the question raised by Australi a, she explained that cooperation with the private 
sector took various forms. The FATF Private Sector Consultative Forum met annually to discuss 
implementation of the AML/CFT measures set out in the FATF Recommendations, seek input and 
feedback into ongoing FATF work, and hear about issues of concern or interest to the private sector. The FATF also engaged with the private sector (on an ad-hoc basis), at the policy-making stage, by soliciting its input for the developmen t of guidance and best practices. In the most 
recent meeting of the Forum, held in March in Brussels, the FATF clarified that the FATF standards 
did not require a "know-your-customer's-customer" (KYCC) approach. She explained that the term KYCC was not used in the FATF standards, and the FATF was now working to clarify how its 
standards on conducting customer due diligence should apply in the correspondent banking 
context. 
2.21.  The representative of Korea enquired about the implications of the FATF work for WTO 
work, which focused on the promotion of trade in financial services. Specifically, he asked the FATF 
representative her opinion about specific areas where both organizations – the FATF and the WTO 
– could cooperate further and enhance synergies between them.  
2.22.  The representative of Turkey asked two questions. Firstly, noting Ms Schilling's comment 
that tax evasion had been included in the list of predicate offences in 2012, she asked how the 
FATF decided on which crimes to include among the so-called predicate offences, and whether any other crime was being considered by the FATF for inclusion in the list. Secondly, she asked the 
FATF representative to elaborate further on the FATF's surveillance mechanism and on the 
sanctions imposed on non-complying countries.  
2.23.  The representative of Ecuador suggested enhancing cooperation between the FATF and the 
WTO. He suggested in that regard that the Secretar iat of the FATF could periodically report to this 
committee on developments in its area of competence.  
2.24.  The representative of the European Union sa id that it had become a tradition in free trade 
agreements signed by the EU to include a clause on regulatory convergence, providing that parties 
to the agreement would endeavour to ensure that internationally agreed standards relevant to 
financial services, such as the 40 FATF Recommendations, were implemented. Those standards were extremely relevant for cross-border trade and investment in financial services, as they 
ensured that countries adopted comparable and equivalent regulations.  
2.25.  The FATF representative turned to the ques tion raised by Korea, and said that there were 
many synergies between the work of the FATF an d the WTO. The FATF kept close contact with 
global banks, including the Wolfsberg Group. The FATF had also identified, through the typologies 
reports, instances in which the financial system ha d been used for illicit purposes. Several methods 
were used by criminal organisations to move money for the purpose of disguising its origins and integrating it into the formal economy, including through the use of the financial system and the 
trade system. The international trade system pres ented risks and vulnerabilities that could be 
exploited by criminal organisations. In part, these arose inter alia from the enormous volume of trade flows. The FATF had published a study on "Trade-based Money Laundering" in 2006. A 
subsequent study was conducted in 2013 by the Asia Pacific Group (APG) – an FATF-style regional 
body and part of the FATF's global AML/CFT network. S/FIN/M/85 
 
- 5 - 
 
  2.26.  Turning to the questions raised by Turkey , she said that the list of predicate offences 
already contained 21 categories, namely participation in an organised criminal group and racketeering; terrorism; human trafficking; sexual exploitation; illicit trafficking in narcotic drugs and psychotropic substances; illicit arms trafficking; illicit trafficking in stolen and other goods; 
corruption and bribery; fraud; counterfeiting cu rrency; counterfeiting and piracy of products; 
environmental crime; murder; kidnapping, illegal restraint and hostage-taking; robbery or theft; smuggling (including in relation to customs and excise duties and taxes); tax evasion; extortion; 
forgery; piracy; and insider trading and market manipulation. Tax evasion was the last one to be 
included in the list.  
2.27.  Several tools were used to monitor compliance with FTAF Recommendations, the most 
important being the mutual evaluation process. Th e mutual evaluation process was very rigorous, 
and took about a year, including on-site visits to the country being examined. Once a country had 
gone through the mutual evaluation, and the re port had been published, a follow-up process 
starts. Sufficient time was given to countries to implement the report's recommendations. 
Countries reported periodically to the FATF Plenary meetings, which were held three times a year. 
I f  n o  c h a n g e s  w e r e  i n t r o d u c e d  i n  a  t i m e l y  m a n n e r ,  t h e n  p o l i t i c a l  p r e s s u r e  r a m p e d  u p  o n  t h e  jurisdiction concerned. The first tool used in those cases was a letter by the FATF president to the 
country concerned highlighting the areas of progress as well as the deficiencies. If that proved 
ineffectual, the next step would be a visit of th e FATF president to the country, meeting with the 
relevant ministries and agencies. If that still did not work, then the FATF would issue a public statement, highlighting its concerns over the l a c k  o f  s u f f i c i e n t  i m p l e m e n t a t i o n  o f  A M L / C T F  
measures. The last measures would be suspension of membership and full withdrawal of 
membership. The latter had not been used thus far, but in a few cases the FATF had threatened to use them.  
2.28.  Finally the FATF representative thanked Ecuador for the suggestion to enhance cooperation 
between the FATF and the WTO.  
2.29.  The representative of Nigeria asked what the FATF's assessment of the legal regime for the 
evaluation of compliance was.  2.30.  The FATF representative said that the first step was to conduct a thorough evaluation of the 
relevant legal framework. All AMF/CFT laws, regulations and guidelines were reviewed according to 
a specific methodology that basically provided a checklist of factors that needed to be met by the 
country. In the case of 'technical compliance', the basic question was whether these elements 
contained in the checklist were present in the legal framework. The FATF standards were flexible enough for countries to find a place in different legal frameworks. The evaluation process provided 
an opportunity for the FATF team to discuss with the country concerned about how the FATF 
objectives were contemplated in the country's legal framework. In order to evaluate the 'effectiveness' of the country's legal framework, the FATF team usually spent a lot of time on-site, 
discussing with the country's authorities how the framework was applied in practice, and what 
results had been achieved. She added that the im provement of effectiveness was the main focus 
of the 4
th round of FATF mutual evaluations, which was currently underway. 
2.31.  The representative of Turkey asked the FATF representative what actions FATF members 
have to take regarding transactions between their own financial institutions and listed non-
complying members. She also asked the WTO Secretariat whether this had any implication on Members' specific commitments.  
2.32.  The FATF representative said that the pu blic statements issued by the FATF are tailored 
specifically to the situation in the country concer ned. However, one of the things the FATF might 
say is that financial institutions doing business with that country should apply enhanced due 
diligence because of specially identified risks. That might be one option. Another option might be 
to raise awareness that the FATF has concerns about how AML/CTF measures were being implemented in that particular country but it mi ght not necessarily call for enhanced due diligence 
on the part of financial institutions. In summary, she said there might be several ways in which 
those public statements could come out.  
2.33.  At the request of the Chairperson, a re presentative of the Secretariat addressed the 
question posed by Turkey. He said that whether a specific recommendation might have S/FIN/M/85 
 
- 6 - 
 
  implications for specific commitments undertaken by a Member depended on a number of factors, 
such as the characteristic and effects of the spec ific measure, and the nature and extent of the 
specific commitments undertaken by the Member concerned. This could only be addressed on a 
case-by-case basis.  
2.34.  The representative of Turkey said that the FATF recommendations were almost binding 
because of the effectiveness of the tools used by  FATF members, one of which was to include non-
complying members in a list. She read out FATF recommendation No.21, which states the 
following: "Financial institutions should give special attention to business relationships and 
transactions with persons, including companies and financial institutions, from countries which do not or insufficiently apply the FATF Recommendations. Whenever these transactions have no apparent economic or visible lawful purpose, their background and purpose should, as far as 
possible, be examined, the findings established in writing, and be available to help competent 
authorities. Where such a country continues not to apply or insufficiently applies the FATF 
Recommendations, countries should be able to apply appropriate countermeasures." She said that 
the fact that almost all financial transactions might be seriously affected explained the 
effectiveness of this tool and why countries did th eir best to be removed from the list. After this 
explanation, she asked the Secretariat whether it could elaborate further on the possible 
relationship between the FATF recommendations and the GATS. 
2.35.  In response to the question by Turkey, a representative from the Secretariat said that the 
first step of any analysis would be to determine whether a specific measure was in conformity with 
obligations and specific commitments under the GATS, the more important being MFN, Market 
access and National Treatment. As explained by Ms. Schilling, the FATF Recommendations were 
not binding within the meaning of public international law, or within the meaning of the Vienna Convention on the Law of the Treaties. The Recommendations were nevertheless effective because 
of the tools used, as indicated by the Turkish de legation. In his view, what was really important 
was to look at the nature of the regulatory in terventions recommended by the FATF. It was not 
clear to him that any of the interventions mentioned by Turkey were discriminatory or fell within 
any of the six types of market access limitations under Article XVI of the GATS. In his view, the 
aim of the FATF Recommendations was to introduce a regulatory intervention that would resolve a certain distortion. That did not necessarily give rise to discrimination, as long as the regulatory intervention was based on objective criteria. However, even if the measure in question were to be 
found not in conformity with obligations or specific commitment under the GATS, the next stage of 
the analysis would be to determine whether the measure in question could be justified under any of the exceptions foreseen in the GATS, includin g the prudential exception contained in the Annex 
on Financial Services.  
2.36.  In concluding, the Chairperson thanked Ms. Schilling, and through her the FATF, for 
participating in the meeting. Ms Schilling's presentation was interesting and informative, and 
stirred up a very interesting discussion. She welcom ed the suggestion by Members to continue the 
cooperation between the Committee and the FATF with  a view to keeping abreast of developments 
in this area. She said that the Secretariat would consult with the FATF Secretariat on the best means to achieve this.  
2.37.  The Chairperson then offered the floor to any Member wishing to raise or discuss any other 
regulatory issue under this agenda item. 
2.38.  The representative of South Africa provided an update on the adoption of a so-called twin 
peak system of financial regulation. The South African financial sector remained largely stable 
during the 2008 financial crisis due to sound regulation and a legislative review process that preceded the onset of the crisis. However, many valuable lessons were learnt during this period. 
As a result, the South African National Treasury instituted a process to further modify and 
strengthen South Africa’s regulatory regime.  
2.39.  To this end South Africa had begun the migration to a twin peaks model of financial 
regulation. In terms of this model the South African Reserve Bank would be responsible for 
prudential oversight of financial institutions, while a new authority would replace the Financial 
Services Board and focus on overseeing market conduct. The twin peaks reform was a multiyear 
project consisting of two phases. The first phase, which was already underway, would see the 
development of supporting legislation and the es tablishment of the prudential regulatory and 
market conduct bodies. The second phase, which would be implemented over three years, would S/FIN/M/85 
 
- 7 - 
 
  focus on harmonizing the specific financial sector legislation and the regulatory and supervisory 
systems. The South African National Treasury had therefore developed the Financial Sector 
Regulation Bill. Once enacted, this Bill would authorize the establishment of the two regulatory 
bodies – The Prudential Authority, within the Reserve Bank, and the new Market Conduct 
Authority. The Bill was first tabled for public comment in December 2013. Based on input received 
it was subsequently revised and again tabled for public comment in December 2014. The revised Bill included changes that ensure authorities ha ve the necessary powers to supervise not just 
individual financial institutions, but also the financial groups to which they belong.  
2.40.  The National Treasury had also released a draft Market Conduct Policy Framework 
Discussion Document. The Document put forward a proposed comprehensive framework for how the market conduct regulator will operate and fulfil its mandate to ensure financial institutions 
treat customers fairly. The Discussion Document was made available for public comment in 
December 2014.  
2.41.  The Committee took note of the statements  made, and decided to revert to this agenda 
item at the next meeting. 
3  ITEM C - TRADE IN FINANC IAL SERVICES AND DEVELOPMENT 
3.1  Financial inclusion and the GATS 
3.1.  The Chairperson recalled that at the last meeting, the Committee continued its consideration 
of the Background Note by the Secretariat on Financial Inclusion and the GATS (S/FIN/W/88). 
Since some Members indicated that they would reve rt to this Note at the present meeting, the 
item was placed again in the agenda. She offered the floor for further comments on the Note and 
for any suggestions for further work on financial inclusion or, more generally, on the issue of trade in financial services and development. 
3.2.  The representative of Turkey said that a ccording to 2014 Global Findex data, 57% of Turkish 
adults had an account at a formal financial institution. Turkey ranked relatively high compared to 
its peers in terms of account penetration. Whil e the data did not distinguish between types of 
financial institution, the dominance of banks in the Turkish financial system suggested that most 
adults access the financial system through a bank rather than other forms of financial institutions. 
On the other hand, according to the 2013 World Bank Enterprise Survey, access to basic finance services appeared to be near-universal for formal  Turkish firms: 79% reported having a checking 
or savings account. In addition, a Financial Capability Survey had been conducted by the World 
Bank and the Capital Markets Board of Turkey in 2012. According to the Financial Education Action 
Plan, financial literacy level would be measured by conducting the survey every 3 years. 
3.3.  A database application called “Fintürk” was being published at the Banking Regulation and 
Supervision Agency (BRSA) web page. This applic ation allowed users to find data segmented by 
province on lending (including consumer loans and credit card usage), non-performing loans (NPLs), deposits per capita, and population per bank branch. These statistics were necessary to 
monitor and evaluate progress in the implementation of financial inclusion policies and to inform 
ongoing reforms and initiatives.  
3.4.  Turkey's approach to financial inclusion was broad and was based on three cardinal notions, 
namely, financial consumer protection, financial education, and access to and usage of financial 
services and products. A Financial Stability Committee, aiming to detect and mitigate emerging systemic risk, to coordinate policy actions, and to better integrate micro- and macro-prudential 
perspectives among institutions, had been established in mid-2011 under the chairmanship of the 
Deputy Prime Minister in charge of Economic and Financial Affairs. The Financial Stability Committee, which comprised the heads of Turkish Treasury, Central Bank, Banking Regulation and Supervision Agency, Capital Markets Board, and Savings Deposit Insurance Fund, also led and 
coordinated financial inclusion initiatives and strategies. The issues related to financial inclusion 
had been taken up by the Financial Stability Committee on the understanding that underdeveloped financial inclusion frameworks adversely affected financial stability. S/FIN/M/85 
 
- 8 - 
 
  3.5.  The Financial Inclusion Strategy of Turkey (Prime Ministry Circular No. 2014/10 on Financial 
Access, Financial Education and Financial Consumer Protection Strategy and Action Plans) was prepared by the committee and published in the Official Gazette No. 29021 dated 5 June 2014.  
3.6.  Significant progress had been made on electronic banking (including mobile and phone 
banking, insurance awareness, and SME financing. A law enacted in 2012 introduced the system of 
so-called "angel investments", through which tax relief measures and capital contributions by relevant public institutions were granted to afflue nt investors willing to invest in high-growth start-
ups (called "business angels"). In addition, a Credit Guarantee Fund acted as an intermediary 
organization and made it possible for SMEs with inadequate collaterals to apply for bank credits.  Turkish Treasury committed one billion Turkish Liras to support the fund. 
3.7.  Poverty reduction was high in Turkey's development agenda. Turkey's policy makers and 
planners conceded that micro finance provided a significant potential for poverty reduction by 
expanding access of the poor and the un-banked to  financial services. The primary suppliers of 
microfinance services were the state-owned Ba nks (Halk Bank and Ziraat Bank) and two NGOs 
(the Grameen Bank initiative in Diyarbakir and Maya Enterprise for Microfinance), which have been 
supplying microfinance since 2002. A new legal framework for microfinance, based on best international practices, was being drafted.  
3.8.  Turkey's financial inclusion strategy also focused on strengthening the demand side through 
well designed financial consumer protection and financial education strategies.  
3.9.  The representative of the Russian Federation gave a brief overview of the situation in his 
country. The regulatory framework had been rece ntly changed with a view to developing the 
national payment system, increasing the level of financial inclusion, and developing microfinance. 
The Central Bank had set the following priorities with regard to financial inclusion: developing best practices in financial services consumer protection, including the implementation of responsible 
consumer lending principles and the establishmen t of a financial ombudsman; implementing best 
practices in handling financial services consumer complaints; developing indicators and a system for the assessment of financial inclusion levels in line with the recommendations of the G20 and 
the Alliance for Financial Inclusion (AFI); promoting financial literacy; promoting digital financial 
services; and ensuring proportionate regulation and supervision of non-bank financial institutions. In line with those priorities, in 2015 the Central Ba nk intended to implement an action plan and 
develop a medium-term strategic framework for increasing financial inclusion.  
3.10.  The Central Bank became a member of the Al liance for Financial Inclusion (AFI) in February 
2014, and announced its commitments to the Maya Declaration in September 2014. The Central Bank was a co-organizer and an active participant in international financial inclusion events. For 
example, a session entitled "Promoting financial inclusion: challenges and opportunities for 
development" had been scheduled as part of the XXIV International Banking Congress held in Saint Petersburg in June 2015. In addition, the Cent ral Bank, jointly with the AFI, planned to hold 
an international conference on the shadow banking system in Moscow, on 12-13 November 2015.  
3.11.  The representative of Argentina said th at the country's basic framework on financial 
inclusion consisted of the 2006 Law on the Promot ion of Microcredit for the Development of the 
Social Economy, which regulated the access to credit of the most vulnerable sectors of society. The 
Law also created the National Registry of Microcredit Institutions within the Ministry of Social 
Development. Through the National Fund for the Pr omotion of Microcredit, the Ministry of Social 
Development provided support to micro-credit institutions. In addition, anti-usury legislation put a 
limit on interest rates on microcredit. Microcredit institutions were grouped under RADIM (Red 
Argentina de Instituciones de Microcrédito). As of December 2012, the 40 institutions grouped under RADIM had disbursed around US$ 50 million in microcredits, with only a 3% delinquency 
rate.  
3.12.  The representative of Ecuador said that the Note by the Secretariat was very valuable since 
it described various strategies and policies to achieve financial inclusion. Of particular importance 
was the discussion on the obstacles to financial inclusion, such as lack of technology, lack of 
information on borrowers, and insufficient financial education. These issues deserved further 
analysis. He proposed therefore that the Secretariat prepared a note focusing on the obstacles to financial inclusion. S/FIN/M/85 
 
- 9 - 
 
  3.13.  The representative of Nigeria said that the promotion of financial inclusion had gathered 
momentum in recent times due to its perceived importance as a driver of economic growth. 
Notwithstanding this global consensus, achieving pervasive financial inclusion remained a global challenge with as much as 54% of adults worldw ide being financially excluded. Although gradual 
progress had been made to enhance financial inclusion, challenges such as low financial literacy, 
inadequate infrastructural facilities as well as inadequate and inefficient technology, had limited the improvement of financial inclusion levels in Nigeria.  
3.14.  Financial exclusion had manifested prominently in Nigeria with the bulk of the money in the 
economy staying outside the banking system. The cr isis in the banking industry during the 1990s 
eroded the confidence of the population in the ba nking sector. One of the first major policies of the 
government aimed at promoting financial inclusion was the adoption of the rural banking 
programme in the late 1970s. Furthermore, to promote increased savings culture and grow a 
banking habit, government founded the People's Bank and facilitated the establishment of community banks. One of the critical initiatives in this direction was the incorporation of financial 
inclusion as one of the cardinal objectives of  the Nigerian Financial System System 2020 (FSS 
2020). The FSS 2020 represented a strategic road map and framework for developing the Nigerian financial sector into a growth catalyst that could enable Nigeria to become one of the 20 largest 
economies by 2020.  
3.15.  At the request of the Chairperson, a representative of the Secretariat referred to the 
proposal by Ecuador. He saw no difficulty in providing the committee with more information on 
obstacles to financial inclusion. If the committee so wished, the Secretariat could issue an 
addendum to document S/FIN/W/88 addressing this specific request. 
3.16.  The representative of the United States sa id that the suggestion to catalogue the obstacles 
to financial inclusion was an interesting exercise but his delegation would need more time to 
reflect on the proposal and and consult with the Chair and the Secretariat on the possibility to 
include topics more relevant to the work of this committee, which should focus on trade in financial 
services. He suggested that the paper could discuss how an open and liberal trade regime actually 
contributed to servicing consumers in foreign markets. That might be a useful contribution.  
3.17.  The representative of Canada agreed with the United States. While information on barriers 
to financial inclusion would be very helpful and it was a very important topic, Canada would be 
interested in maintaining the link between that  discussion and the mandate of this committee, 
which was to explore trade in financial services. His delegation would like to see something more 
concrete in the work of the Secretariat. 
3.18.  The representative of Nigeria asked the Secretariat to clarify whether the basis for Ecuador's 
request was paragraph 7.2 of the Secretariat Note (S/FIN/W/88).  3.19.  The representative of the Secretariat said  that paragraph 7.2 of the Note meant exactly 
what it said. In preparing the Note, the Secretariat felt that the issue of financial inclusion was not 
only broad but also very important from a policy an d trade perspective. This was the first time the 
committee, or indeed the WTO, addressed the question of financial inclusion. It became clear to the Secretariat that there was more to the subj ect than what could be covered in a single 
document. That was the rationale behind the invitation for further work contained in paragraph 7.2 
of the Note. Of course, that further work woul d be subject to Members' decision. Turning to 
Ecuador's proposal, he added that his understanding of the discussion was that there was no objection to the Secretariat preparing another Note, but further clarification was needed about the 
precise content of such document. In that regard, suggestions were made by the United States 
and Canada to look not only at the obstacles to financial inclusion, but also at how the promotion of a competitive environment could contribute to furthering financial inclusion. Once that aspect 
was clarified, the Secretariat could then proceed to prepare the Note. 
3.20.  The Chairperson said that she saw no objection to the Secretariat preparing an addendum 
to the Note on financial inclusion. She added that the Secretariat would undertake consultations 
with interested delegations on the possible scope and content of this addendum.  
3.21.  The Committee took note of the statements ma de and decided to revert to this agenda item 
at the next meeting.  S/FIN/M/85 
 
- 10 - 
 
  4  ITEM D - RECENT DEVELOPMENTS  IN FINANCIAL SERVICES TRADE 
4.1.  The Chairperson recalled that as a standing feature of the agenda, this item had been used to 
either present and discuss recent developments in individual Members' markets or introduce 
proposals that eventually led to specific dedicated discussions or seminars (e.g. on macro-
prudential policy and regulation, on non-life insu rance services, on the impact of technology on 
regulation, supervision and compliance). She encouraged Members to use this agenda item as a setting to discuss any recent development in financ ial services trade, which may not necessarily be 
of a regulatory nature. In her view, it was in the interest of all Members, and certainly within the 
competence of this Committee, to keep abreast of  developments in the financial services sector, 
either at the global, regional or country level.  
4.2.  The Committee took note of the statements ma de and decided to revert to this agenda item 
at the next meeting.  
5  ITEM E - FUTURE WORK 5.1.  The Chairperson said that as it was usually done at the beginning of a Chairperson's tenure, 
she had decided to insert an item to address Future Work, the idea being to allow for an exchange 
of views among Members about further work th at the committee could undertake. She reminded 
Members that the terms of reference of the Comm ittee were very broad, and there was certainly 
room to address various types of issues. As already advanced in the annotated agenda, her plan 
was to invite Members to share their views on which areas to move forward in the Committee. In that regard, she informed the Committee that Pakistan had responded to that call, and came forward with a specific proposal for Members' cons ideration. However, due to the presence of the 
Minister in town, the delegate of Pakistan was unable to attend this meeting, but had requested 
the Chairperson to read a statement on his behalf.  
5.2.  The Chairperson proceeded to read the statement: "Pakistan is of the firm belief that financial 
services remain the mainstay of any economy. Howe ver, one of the core financial services sectors 
has received less attention than other services: Islamic banking and insurance. Indeed, we are not fully aware of the importance and impact of Isla mic banking and insurance, and of their critical 
role in minimizing the impact of the global financial crisis. Pakistan therefore proposes that the 
Committee holds a workshop on Islamic banking and insurance." 
5.3.  The representative of Canada said that more information was needed on the proposal, 
including whether the intention was to hold a one- time workshop or to have a dedicated discussion 
in the Committee. 
5.4.  The representative of the United States said  also said that more information was needed on, 
for example, the format of this event, the po tential participants, and the participation of 
international organizations, before a decision could be taken to hold the workshop. 
5.5.  The representative of South Africa said that he would not object to the organization of such a 
workshop, but reminded Members that the Comm ittee held a dedicated discussion on Islamic 
finance in November 2009 (S/FIN/M/61). Members should assess what value could be added on 
this topic at this stage. 
5.6.  The representative of Nigeria also said that more information was needed, for example, on 
the format of the exercise, the content of the pr ogram, the level of participation, etc. Members 
should also consider whether it was possible to hold the workshop in the remainder of the year. In 
any case, it would be more appropriate to take a decision with the Pakistani delegation present at the meeting. 
5.7.  The representative of India said that the proposal needed to be fleshed out. The proposal 
should be discussed in the presence of Pakist an. Perhaps, the Chairperson could organize 
consultations. She added that, as announced und er agenda item B, the IFSB might make a 
presentation before the Committee in the near future. That presentation would already provide 
Members with relevant information on Islamic finance. She suggested that Members could decide on the organization of a workshop after the IFSB  presentation. She hoped the IFSB could present 
before the Committee as soon as possible. S/FIN/M/85 
 
- 11 - 
 
  5.8.  The representative of Egypt welcomed the proposal by Pakistan, but considered that more 
information was needed on, for example, the form at and content of the workshop. He supported 
India's suggestion. His delegation stood ready to participate in further discussions or consultations on this proposal.  
5.9.  The representative of China echoed the suggestion made by India. In any case, further 
information from Pakistan was needed.  
5.10.  The Chairperson thanked Members for their initial reactions to the proposal by Pakistan. She 
agreed that it was very difficult to decide on th is matter in the absence of the proponent. She said 
she would hold informal consultations in order to clarify substantive and organizational aspects of the proposed workshop, and would report back to the Committee in order to decide how best to proceed.  
5.11.  The Committee took note of the statements made and decided to revert to this proposal at 
the next meeting. 
6  ITEM F - OTHER BUSINESS 
6.1.  There were no issues raised under Other Business.  
__________