THE ROLE OF FINANCIAL INCLUSION IN STRENGTHENING AML/CFT FRAMEWORKS: BALANCING ACCESS AND SECURITY IN THE U.S. FINANCIAL SYSTEM

This paper examines the oscillating association between financial inclusion and the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) systems of the United States, with an emphasis on the issue of balancing access to finance and security regulations. Although banking services have been extended to the unbanked and underbanked, stringent anti-money laundering laws like Know Your Customer (KYC) and Customer Due Diligence (CDD) have ended up discriminating against the underprivileged members of society, such as low-income earners, immigrants, and the unbanked. This study seeks to examine the way inclusive financial systems can reinforce AML/CFT mechanisms, in a concomitant manner that guarantees fair economic inclusion. The study provides an evaluation of peer-reviewed articles, official reports, and policy documents through the lens of qualitative literature review methodology. It derives conceptual tensions and synergies between inclusion and regulation, puts a focus on technological interventions, and discusses successful case studies such as Kenya M-Pesa, the tiered KYC system in Mexico, or the U.S. Treasury Project REACh. Such cases show how new architecture and technologies, including biometrics, AI, and blockchain, can close the inclusion-security gap. The evidence suggests that financial inclusion can enhance AML/CFT performance by reducing reliance on the informal system, enhancing the transparency of transactions, by facilitating risk profiling. Nevertheless, the research also defines the critical gaps in its investigation, referring to the unintended exclusionary impacts of regulations and the experimental effects of AI and blockchain on compliance. Lastly, the research proposes dynamic regulatory frameworks, risk-based compliance, and integration of technology as possible paths to secure and inclusive finance. Such a balance will be the key to developing resilient, transparent, and fair financial ecosystems that will prevent financial crimes without stigmatizing vulnerable groups. Keywords: Financial Inclusion, Financial System, Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), Know Your Customer (KYC), Customer Due Diligence (CDD), Financial Crimes Enforcement Network (FinCEN), Bank Secrecy Act (BSA), Suspicious Activity Reporting (SAR), USA PATRIOT Act, Blockchain, Artificial Intelligence (AI).