Unlocking financial inclusion: Why legal access alone isn’t working for displaced populations

Millions of refugees are now legally allowed to access financial services, yet in practice, many still cannot open a bank account, register a SIM card or use digital payments. A recent UNHCR global comparative analysis, conducted with the support of DLA Piper International, examines regulatory frameworks across 79 countries to map refugee and asylum-seeker access to formal financial and digital services across regions. The findings show that in more than half of the 62 core countries analysed, refugees are now legally permitted to access financial services under existing frameworks.

This marks important progress. A decade ago, legal exclusion was far more common. Today, in many contexts, the foundations for financial inclusion are already in place.

However, for millions of forcibly displaced people, this progress remains incomplete. Access is expanding – but fairly often not working in practice. As digital financial systems scale rapidly, this gap risks becoming more structural. In many cases, barriers are no longer primarily rooted in restrictive laws. Instead, they arise from how laws, regulations and operational systems interact on the ground.

The research highlights a broader shift towards more enabling regulatory environments.

Countries in Latin America and the Caribbean generally show inclusive regulatory approaches. In Brazil, Ecuador and Chile, refugee and asylum frameworks are increasingly integrated into national financial and digital service systems, allowing displaced populations to access formal financial services using recognized documentation.

In Europe, the EU Payment Accounts Directive and related EU-level protections provide an important legal foundation for financial inclusion, including access to basic payment accounts, although implementation continues to vary across providers and countries.

In Sub-Saharan Africa, mobile-based services have significantly expanded access, particularly where refugee policies are relatively enabling. Uganda and Ethiopia – two of Africa’s largest refugee-hosting countries – alongside countries such as Malawi, have developed relatively advanced inclusion frameworks for both refugees and asylum-seekers.

By contrast, in much of Asia and the Middle East and North Africa, exclusion tends to remain more systemic, often linked to limited legal recognition of refugee status and stronger reliance on nationality- or residency-based identification systems.

Even within relatively enabling environments, outcomes continue to depend heavily on whether refugee and asylum-seeker documentation is consistently recognized and operationalized in practice. Legal access alone does not ensure functional access.

Financial institutions and mobile network operators often face uncertainty in interpreting regulatory requirements, particularly related to customer due diligence and acceptable forms of identification under anti-money laundering and counter-terrorism financing frameworks. In the absence of clear guidance or consistent supervisory expectations, providers may adopt conservative approaches that limit onboarding – even where no legal prohibition exists.

The result is a persistent gap between formal access and practical inclusion.

Requirements relating to identity, residence or income may be applied inconsistently or interpreted in ways that are difficult for displaced populations to meet. Even where refugee documentation is legally valid, providers may be unfamiliar with it, unable to verify it through existing systems, or uncertain about its acceptability under compliance frameworks.

In these contexts, access becomes contingent not on what regulations allow, but on how industry players interpret and operationalize those rules.

This gap is particularly visible in the distinction between refugees and asylum-seekers.

Recognized refugees are generally more likely to hold government-issued documentation that can be integrated into national systems and used for standard Know Your Customer (KYC) processes.

By contrast, asylum-seekers often rely on temporary or procedural documentation issued during status determination processes. These documents are frequently not recognized for KYC compliance or SIM registration, even in contexts where no explicit legal restrictions exist.

As a result, asylum-seekers are systematically more likely to face exclusion – not necessarily because access is formally denied, but because existing systems are not designed to accommodate the forms of identification they hold.

The rapid expansion of digital financial services is reshaping financial inclusion trajectories.

Mobile money, digital wallets, remote onboarding and electronic KYC systems have enabled providers to expand access, reduce costs and scale service delivery. In some regions, mobile-based services now serve as the primary gateway into the formal financial system.

At the same time, digitalization is introducing new forms of exclusion.

As systems increasingly rely on biometric verification, digital identity infrastructure and automated onboarding, access becomes dependent on whether individuals’ documentation can be digitally recognized within national databases. Where refugee or asylum-seeker documentation is not interoperable with these systems, exclusion risks becoming embedded within the financial infrastructure itself.

In other contexts, barriers arise even earlier. Where displaced populations cannot register SIM cards due to documentation constraints, access to mobile connectivity – and therefore to digital financial services – remains limited from the outset.

Digitalization therefore creates both inclusion opportunities and exclusion risks, often simultaneously, particularly where limited digital literacy constrains people’s ability to engage with new systems.

The evidence shows that meaningful progress has been made. In many countries, the legal foundations for refugee financial inclusion are already in place.

But across contexts, a dual challenge persists. In some countries, barriers stem primarily from how regulations are interpreted and implemented in practice. In others, legal and policy gaps continue to constrain access more fundamentally.

Even within relatively enabling environments, the same pattern emerges: where documentation is clearly recognized, guidance is explicit, and implementation is aligned across systems, access becomes feasible. Where it is not, barriers persist – even where inclusion exists in principle.

Advancing financial inclusion for forcibly displaced populations therefore increasingly depends on operationalizing existing frameworks. This includes improving access to formally recognized identity documents, adapting KYC frameworks to support proportionate, risk-based approaches, strengthening incentives and regulations for inclusive digital financial services, and enhancing the role of supervisory authorities in guiding providers and raising awareness. Equally important is the integration of displaced populations into national financial inclusion strategies and the expansion of financial and digital literacy programmes.

Achieving meaningful access and sustained usage of formal financial services also requires stronger cross-sector collaboration. Progress depends on coordination across migration, identity, financial regulation and telecommunications systems, as well as partnerships between governments, regulators, financial institutions, telecom operators and humanitarian actors.

Closing the gap between access in principle and access in practice is the next frontier – and one of the most immediate and scalable pathways to expanding financial inclusion for refugees worldwide.