This article examines the recommendations of an influential international advisory body, the Financial Action Task Force (FATF), towards regulation of Alternative Remittance Systems (ARSs). The analysis shows that FATF is right in pointing out that ARSs are useful vehicles for criminals to move operational expenses and launder the proceeds of their crimes. However, based on the cases of Afghanistan and the United Arab Emirates (UAE), it is argued that FATF’s main approach of seeking to integrate these informal, traditional systems into the sphere and regulations of the formal banking system can be ineffective and even counterproductive in developing countries. Rather than taking a genuinely risk-based approach, all ARS operators are required to be registered or licensed, conduct Customer Due Diligence (CDD) and fill out Suspicious Transaction Reports (STRs), just like commercial banks. The impact of mandatory registration and requiring CDD and STRs has been negligible in Afghanistan and the UAE. Therefore, the article calls for new approaches to control money laundering in ARSs.