Digital Frontiers

Regulation of DFS

ARTICLES

Cybersecurity for Financial Inclusion: Framework & Risk Guide

The primary purpose of this document is to provide key principles and best practices that will offer guidance to assist regulatory and supervisory authorities in devising tools for the financial sector to deal with cybersecurity risks. The Guide is also useful for financial service providers to help them strengthen their cyber-risk management in the provision…

Bank of England Settlement Accounts

This paper states the Bank’s policy for providing settlement services to payment systems, for providing settlement accounts in sterling in the Bank’s Real Time Gross Settlement (RTGS) system and for granting access to intraday liquidity.

Cybersecurity and Financial Inclusion: Protecting Customers, Building Trust

Cyber-threats have become a growing concern in emerging financial markets and are weakening consumer trust and confidence in digital financial services. Industry players and governments in emerging markets are becoming aware of the need to develop regulatory frameworks, industry guidance and supervisory processes. However, cybersecurity requires expertise and resources that are often scarce in developing…

G20/OECD Policy Guidance on Financial Consumer Protection Approaches in the Digital Age

In an increasingly digital environment for financial products and services with the potential to support greater financial inclusion and inclusive growth, the need for effective financial consumer protection is more important than ever. At the same time, the policies and approaches developed and adopted by financial consumer protection authorities need to evolve and adapt in…

How to Build a Regulatory Sandbox: A Practical Guide for Policy Makers

Regulatory sandboxes have attracted significant attention for their potential to empower financial regulators struggling with fast-paced innovation. Through a sandbox, regulators can carefully monitor digital products, services and business models in a live testing environment, enabling firms to bring innovations to market more quickly and readily. But when and under what circumstance sandboxes are the…

SDGs & Socially Responsible Finance (SRF) – Case Studies from Selected AFI Members

This case study examines the role of financial institutions in achieving the UN SDGs through socially responsible finance (SRF), a broad range of political and commercial adjustments aimed at ensuring financial systems protect society and the environment.

Decoupling Fintech Regulations from Mainstream Banks: A Catalyst for Innovation

This webinar organised by Digital Finance Professionals Ghana, discussed global trends in the DFS space and highlight strides that Ghana has chalked in growing its DFS market. Panelists for the webinar were: Derek B. Layrea – Head, Research and Communications, of Telecoms Chamber David Porteous – Chairman of Digital Frontiers and CEO of BFA Global…

Policy Options in a Post-COVID-19 Africa

A COVID-19 policy response framework to recover and adapt. COVID-19 is leaving no country unaffected. The global scale of the pandemic is affecting trade, capital flows, tourism and remittances, while lockdown or other measures to contain the spread of the virus are affecting domestic output and livelihoods. Sub-Saharan Africa (SSA), where most economies were in a…

India’s New Approach to Personal Data-Sharing

Over the past decade, India’s investments in its digital financial infrastructure—known as “India Stack”—have sped up the large-scale digitization of people’s financial lives. As more and more people begin to conduct transactions online, questions have emerged about how to provide millions of customers adequate data protection and privacy while allowing their data to flow throughout…

KYC Innovations, Financial Inclusion and Integrity in Selected AFI Member Countries

It is estimated that approximately one billion people across the world do not have access to an officially recognizable identity. The accurate verification of identity is integral to the Know Your Customer (KYC) processes necessary for compliance with Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) regulation. The inability of financial institutions to properly verify…

Policy Framework for Leveraging Digital Financial Services to Respond to Global Emergencies – Case of COVID-19

The global pandemic COVID-19 and the ensuing emergencies have reinforced the urgency of using Digital Financial Services (DFS) to preserve the functioning of financial systems and the security of people during the period of declining demand, reduced supplies, and tightening credit terms. Digital payments, particularly when accompanied by digital financial Infrastructure and enabling regulations, help…

Inclusive Integrity Toolkit

Countries in the sub-Saharan Africa (SSA) region have been on a development curve in setting up effective Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulatory responses that meet the international Financial Action Task Force (FATF) standards. This toolkit is the first of its kind and benefits from extensive comments and reviews from FATF as…

Regulating Financial Services in an Era of Technological Disruption

Financial regulators are challenged to respond to the innovation opportunities presented by financial technology (fintech). Current rules are not necessarily sufficient or effective to adequately regulate new business models and new products relating to innovations such as crypto assets or digital financial services. Regulators that fail to respond in a timely manner may drive innovation…

Clients Deserve to Know: Using Radio to Educate and Empower Consumers in Africa

Everyone has a role to play to improve financial consumer protection, including clients. This report explores lessons learned from three CFI initiatives in Ghana, Benin, and Uganda to raise consumer awareness of their rights and responsibilities when accessing financial services.

Ghana’s Digital Financial Services Policy

Ghana became the first country to launch a digital financial services (DFS) policy. While the policy has been years in the making, the government hopes the policy will support various measures it is taking to leverage DFS in its COVID-19 response. Developed with technical support from CGAP and funding from the Swiss State Secretariat for…

Golbal Dialogue on Regulatory Approaches for Inclusive FinTech

Financial policymakers and regulators in emerging and developing countries are mindful of the potential that FinTech holds for financial inclusion. While there is an increasing global convergence on the debate about and  implementation of regulatory and supervisory responses to these business model innovations, knowledge on how to deal with the risks of fast-moving technologies remains…

Fintech, Regtech and the Role of Compliance Report 2020

The 4th Thomson Reuters Regulatory Intelligence report has been published on fintech, regtech and the role of compliance in 2020. It explores the adoption and use of technology and its implications for compliance. The report also highlights the shifting role of the regulator and concerns about best or better practice approaches to tackle the rise…

Global Risks Report 2020

The 15th edition of the World Economic Forum’s Global Risks Report is published as critical risks are manifesting. The global economy is facing an increased risk of stagnation, climate change is striking harder and more rapidly than expected, and fragmented cyberspace threatens the full potential of next-generation technologies — all while citizens worldwide protest political and economic…

Nonbank E-Money Issuers vs. Payments Banks: How Do They Compare?

A key regulatory enabler for building inclusive digital financial services is creating a special licensing window for electronic money issuers (EMIs). Because EMIs have a lower risk profile than banks, they require less regulatory oversight. A special licensing category that recognizes that their role is to store customer funds converted into e-money held in basic…

Fair Play: Ensuring Competition in Digital Financial Services

In many emerging economies, digital financial services markets are limited to one or two major providers, reducing innovation, customer choice and potentially facilitating monopolistic or cartelistic behavior. Why are DFS markets prone to concentration? Is this a problem? In this primer, CGAP applies a framework to help answer these questions and demonstrate how regulation can have…

Cyber Security in Financial Sector Development: Challenges and Potential Solutions for Financial Inclusion

This paper assesses the relevance of cyber security for the development of inclusive financial systems in developing countries. The growing use of digital financial services and shared service platforms has increased the financial sector’s exposure to cyber risks. Financial service providers and their customers, regulators and supervisors are challenged with the increase in cyber threats…

Fair Play: Ensuring Competition in Digital Financial Services

In many emerging economies, digital financial services markets are limited to one or two major providers, reducing innovation, customer choice and potentially facilitating monopolistic or cartelistic behavior. Why are DFS markets prone to concentration? Is this a problem? This paper from CGAP applies a framework to help answer these questions and demonstrate how regulation can…

Doing Business 2020

The Doing Business 2020 study shows that developing economies are catching up with developed economies in ease of doing business. Still, the gap remains wide. An entrepreneur in a low-income economy typically spends around 50 percent of the country’s per-capita income to launch a company, compared with just 4.2 percent for an entrepreneur in a…

Examining the financial regulation of consumer-facing fintech in India

The excitement around fintech in India is palpable. This enthusiasm can be attributed to fintech’s potential as a market-led solution to the policy objective of financial inclusion. Fintech can expand the reach of formal finance by offering users personalized financial products in an economically viable manner. Unsurprisingly then, regulation of fintech is central to financial…

Cybersecurity for Financial Inclusion: Framework & Risk Guide

This document provides key principles and best practices that will offer guidance to assist regulatory and supervisory authorities in devising tools for the financial sector to deal with cybersecurity risks. The Cybersecurity Guide is also useful for financial service providers to help them strengthen their cyber-risk management in the provision of financial services that target…

Policy Model for E-Money

AFI network’s knowledge and experience in applying various e-Money policies and regulatory approaches have had a significant impact in advancing financial inclusion. It has helped create enabling environments for the deployment of innovative financial services by building resilience in the financial systems and protecting clients in this spectrum of electronic money services. The E-Money Policy…

Risk-based Customer Due Diligence

in the context of policies on anti-money laundering and combating the financing of terrorism (AML/CFT), advancing financial inclusion poses special challenges. Regulation must protect the integrity of financial systems and, at the same time, put the least burden on outreach to poor people and the unbanked. Achieving this balance requires a risk-based system of customer…

Risk-Based Customer Due Diligence: Regulatory Approaches

Regulators face a challenge in balancing policies on anti-money laundering and combating the financing of terrorism against placing the least burden on outreach to the poor and unbanked. This Technical Note provides guidance on using risk-based approaches to customer due diligence (CDD), supported by examples drawn from around the world. There are three regulatory options for employing…

The Client Protection Principles

Responsible financial inclusion is being fully transparent in the pricing, terms and conditions of all financial products. Responsible financial inclusion is working with clients so they do not borrow more money than they can repay or use products that they do not need. Responsible financial inclusion employs respectful collection practices and adopts high ethical standards…

Consumer Protection Standards for Digital Credit

With an emerging consensus around the importance of responsible digital credit, demand is rising for a shared set of criteria to assess the practices of digital lenders. Investors and regulators want a way to evaluate consumer protection practices among the financial service providers they invest in or regulate. Digital financial service providers also want guidance to…

Handbook on Consumer Protection for Inclusive Finance

As digital technologies transform financial inclusion, with new providers, products, and delivery channels reaching out to the financially excluded, the need increases for effective legal and regulatory frameworks to protect low-income consumers. A sound legal framework for consumer financial protection will support financial inclusion and innovation, allow new products and services to responsibly reach previously…

Global Microscope 2019: The Enabling Environment for Financial Inclusion

Regulators play a significant role in catalyzing or impeding a country’s progress toward financial inclusion. By evaluating five domains of the regulatory environments in 55 countries (i.e., government and policy support, stability and integrity, products and outlets, consumer protection and infrastructure), the Global Microscope identifies each country’s current policies and regulations and notes which are…

Sustainable finance in emerging markets and the role of securities regulators

During the past several years, market participants, regulators and policy makers have increasingly focused their attention on issues concerning sustainable finance in its many forms. These issues are particularly relevant for growth and emerging markets as they seek to develop capital markets in their jurisdictions. Accordingly, in late 2017, IOSCO’s Growth and Emerging Markets Committee…

Regulating for responsible data innovation: the role of insurance regulators in dealing with risks relating to consumer data protection and privacy

Data innovation is challenging the traditional role of insurance regulators. Two major dilemmas emerge that insurance regulators and indeed all financial sector regulators face when confronted with how to regulate consumer data: 1. They must tread the balance to achieve positive consumer outcomes, by both enabling data-driven innovation but still protecting consumers from the risks…

Regulating for innovation: an evolving framework

This focus note from Cenfri aims to equip regulators with a decision framework that illustrates the available tools required to regulate for innovation. Digital innovation is changing the nature of financial markets. Innovation can create opportunities, enhance efficiencies, increase competition, drive scale, and improve the reach and value of financial products and services to consumers.…

Suptech Applications for Anti-money Laundering

Suptech, or the use by financial authorities of data collection or advanced data analytics tools enabled by innovative technologies, seems more advanced in the field of anti-money laundering (AML) and combating the financing of terrorism (CFT). In particular, AML/CFT authorities need suptech-enabled advanced data analytics tools to analyse large volumes of information at their disposal.…

Beyond KYC Utilities: Collaborative Customer Due Diligence

The private and public sectors are increasingly leveraging new technologies to deliver collaborative approaches for financial service providers (FSPs) to meet customer due diligence (CDD) requirements. These include sharing data and elements of compliance functions on a level that was previously unthinkable. By pooling resources, these collaborative approaches have the potential to lower CDD costs…

Cybersecurity Guideline for Payment Service Providers

The Cental Bank of Kenya has developed a Cybersecurity Guideline for Payment Service Providers (PSPs). The objective is to create a safer and more secure cyberspace that underpins information system security priorities, to promote stability of the Kenyan payment system sub-sector. The Guideline sets the minimum standards that PSPs are required to adopt in order…

Inclusive Digital Financial Services: A Reference Guide for Regulators

The Bill & Melinda Gates Foundation’s Financial Services for the Poor Program (FSP) believes that effective financial services are paramount in the fight against poverty. Nonetheless, today more than 1.7 billion people live outside the formal financial sector. Increasing their access to high quality, affordable financial services will accelerate the well-being of households, communities, and economies in…

Anti-Money-Laundering (AML) & Countering Financing of Terrorism (CFT) Risk Management in Emerging Market Banks

For banks in emerging markets, the regulatory landscape is more complicated than ever. Rules  designed to fight money laundering and root out terror finance have made the financial system safer  and more resilient but have also increased the cost and complexity of doing business in developing countries—with negative consequences for cross-border trade and the networks…

National Payments Corporation of India and the Remaking of Payments in India

The lessons learned from the NPCI success story can be useful for policy makers in financial inclusion and other markets. Some factors illustrated in the NPCI story include: An industry-led approach to ownership and governance, with strong regulator backing. Competitive economics through a utility model, mixed with smart growth and a start-up culture. A strategy of incremental,…

G20/OECD Policy Guidance Financial Consumer Protection Approaches in the Digital Age

Given the increasingly digital environment for financial products and services and the potential for digitalisation to support greater financial inclusion and inclusive growth, the need for effective financial consumer protection is more important than ever. It is equally important that the policies and approaches developed and adopted by financial consumer protection authorities need to evolve and adapt in…

Staying Ahead of Cyber Crime

Greater organisational collaboration across the financial services sector, working alongside law enforcement and Government agencies, will be the key means of putting cyber criminals out of business according to the latest report from UK Finance and KPMG. The report, “Staying Ahead of Cyber crime”  discusses how greater cooperation both within businesses and between firms, law enforcement…

The Jordan Landscape – A Situational Analysis

Financial inclusion in Jordan has increased from 24.6% in 2014 to 33.1% in 2017. 13.2% are informally served and 38 % remains excluded. Realizing that inadequate access to and usage of financial services limits opportunities to start and grow a business, create jobs and gain access to inputs, equipment, skills and knowledge, the Central Bank…

Payments study tour report

Broadening financial inclusion has been a social, economic and political priority in South Africa since 1994, but we now recognise that meaningful inclusion goes way beyond ensuring someone simply has a bank account. The promise of digital channels and digital transactions is that they will truly democratise the financial system for the benefit of all.…

Illicit Financial Flows: A Financial Integrity Perspective

Addressing Illicit Financial Flows (IFFs) is a target in the Sustainable Development Goals (SDGs). This article by Cenfri explores the different definitions of IFFs, challenges of quantifying IFFs, and the impact they have on financial integrity. Read more here.

Central Banks and Distributed Ledger Technology: How are Central Banks Exploring Blockchain Today?

The World Economic Forum have produced a white paper which explores globally which central banks are exploring the use of blockchain technology and those researching and experimenting with central bank digital currency (CBDC). Known for their caution and risk adverse approach, it is interesting to see how many central banks believe the technology may help…

Learnings from comparing consumer credit protection systems in Pakistan and South Africa

Trust in the product and the financial service provider plays a vital role when looking at uptake and usage. Having effective recourse procedures is an important component of creating and keeping consumer trust.  This informative blog post from Cenfri looks at consumer recourse in Pakistan and South Africa, and identifies best practices and actions for improvement.

Early Lessons on Regulatory Innovations to Enable Inclusive FinTech

The United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGA) published a report reviewing some early lessons on regulations that provide an enabling environment for FinTechs. FinTech has the potential to increase financial inclusion globally and transform lives. Countries need regulations in place to manage risk and consider new approaches to regulation, such…

A Guide to Supervising E-Money Issuers

Although a specialized regulatory window for e-money issuers (EMIs) has been recognized as a key regulatory enabler for inclusive digital financial services, regulation alone is not enough. It needs to be complemented by an efficient and effective supervisory regime to enforce compliance. While there is a solid body of evidence about how to regulate EMIs, much less…

A Regulatory Diagnostic Toolkit for Digital Financial Services in Emerging Markets

Digital financial services (DFS) are growing at a rapid rate and provides the opportunity to reach more clients, including the under-served. It has a significant role to play in both financial inclusion and economic development, but it is challenging in particular for regulators due to the fast pace of change and innovative approaches. This Regulatory Diagnostic…

Payment Systems in Sub-Saharan Africa

This two-part note series explores the state of national and regional payment systems in sub-Saharan Africa (SSA).

Global Payment Systems Survey (GPSS)

The World Bank’s Global Payment Systems Survey (GPSS) surveys national and regional central banks and monetary authorities on the status of payment systems. The GPSS is the only global survey that combines quantitative and qualitative measures of payment system development and covers all aspects of national payment systems – from infrastructure and the legal and…

I-SIP Toolkit: Policy Making for an Inclusive Financial System

As of 2018, more than 90 countries have publicly committed to promoting financial inclusion—and the number will continue to grow. Financial regulators and supervisors in these countries are discovering the value of a structured approach in helping them to implement policies and strategies on financial inclusion (I) alongside their core responsibilities to promote micro- and…

Practices and Tools required to support Risk-based Supervision in the Digital Age

FinCoNet developed a survey to collect relevant examples of supervisory practices that are innovative and forward-looking. FinCoNet members and non-members responded to the survey and shared their insights, experiences and practices among the conduct supervision community during the second half of 2017. Due to the high speed of technological change, supervisors have to continuously adapt…

Global Microscope 2018: The Enabling Environment for Financial Inclusion and the Expansion of Digital Financial Services

The 2018 Global Microscope shows countries in Latin America and Asia have the most conducive environments for financial inclusion. It is is a benchmarking index that assesses the enabling environment for financial inclusion in 55 countries. This edition, with a revised research framework, offers a forward-looking focus on the digital financial services now and in…

What is the role of insurance regulators in dealing with consumer data protection risks arising from increased data availability and usage?

Across the globe  industries, businesses are collecting, storing and using increasing amounts of consumer data. This has been made possible by the growth in the reach of the internet, particularly through smartphone penetration, and the increased capacity to collect and share data on individuals. The technological developments in data analytics have increasingly allowed businesses to…

Digital Finance and Data Security

The digitalisation of financial services creates many opportunities, including increasing financial inclusion and reaching the under-served population. Concerns are now raising with regards to data and the security of our information in this increasingly digital world. The goal of this research, conducted by CFI Fellow Patrick Traynor, is to examine how well digital lenders are responding to…

Payment Systems and Privacy

This article from Federal Reserve Bank of St. Loius, examines the relationship between payment systems and Priviacy. Privacy in payments is desired not just for illegal transactions, but also for protection from malfeasance or negligence by counterparties or by the payments system provider itself. Proposals to abolish cash take inadequate account of these legitimate demands…

Technologies of Compliance: Risk and Regulation in a Digital Age

Legal scholarship has been silent about a phenomenon with profound implications for governance: the automation of compliance with laws mandating risk management. Regulations and laws have required firms to develop processes to identify, assess and mitigate risk, and technology systems and analytics have been brought in to achieve this. While these technology systems offer powerful compliance tools, they…

Basic Regulatory Enablers for Digital Financial Services

Digital financial services (DFS) differ from traditional financial services in several ways that have major implications for regulators. The technology enables new operating models that involve a wider range of actors in the chain of financial services, from design to delivery. The advent of DFS ushers in new providers such as nonbank e-money issuers (EMIs),…

Fraud in Mobile Financial Services

The paper provides numerous and diverse examples of frauds committed on mobile financial services as well as discussing possible mitigation strategies. Fraud is not unique to mobile financial services, it occurs in all financial services. Nevertheless, since mobile financial services are one of the high potential methods to increase financial inclusion and extend financial services…

2017 Good Practices for Financial Consumer Protection

The Good Practices is designed as both a comprehensive reference and an assessment tool for country-level policymakers and regulators. It is intended to serve as a practical, helpful collection of good practices in financial consumer protection, drawing from successful practices seen around the world and consolidating, complementing, and expanding upon high-level international principles and guidelines.

Good Practices for Financial Consumer Protection

In recent years, financial consumer protection has become an increasing priority for policy makers around the world, including World Bank Group client countries. Protecting consumers from abusive practices and enabling them to make well-informed decisions regarding the use of financial products and services is an important policy goal in and of itself, but also has…

FATF Guidance on AML/CFT Measures and Financial Inclusion, with a Supplement on Customer Due Diligence

The FATF recognises that applying an overly cautious approach to anti-money laundering and countering the financing of terrorism (AML/CFT) safeguards can have the unintended consequence of excluding legitimate businesses and consumers from the formal financial system.  In 2013, the FATF published the Guidance on AML/CFT Measures and Financial Inclusion, which provided support for designing AML/CFT…

Applying the RIA Lite Methodology: An Example from Pakistan

There is growing interest in understanding the impact of regulatory changes on financial inclusion. While a regulatory impact assessment (RIA) has become an integral part of law making in many OECD countries, it is still a relatively new concept in emerging and development economies and there is little precedence of conducting an RIA on regulatory…

Digital Authentication: New Opportunities to Enhance the Customer Journey

Aite Group’s latest report, Digital Authentication: New Opportunities to Enhance the Customer Journey, explores merchant and financial institution initiatives to create an intuitive user experience. A variety of technologies, such as biometrics, is now available that can bring both greater security and a superior user experience. However, the resulting cacophony of vendor messages can be confusing…

CPMI-IOSCO Self-assessment Public Disclosure for Faster Payments Scheme Limited (FPSL) 2017

CPMI-IOSCO Principles for Financial Market Infrastructures (PFMI) were published in April 2012 by the Committee on Payment and Market Infrastructures and the Technical Committee of the International Organisation of Securities Commissions (CPMI-IOSCO). FPSL is considered an FMI by the Bank of England and therefore must adhere to applicable principles by completing an annual self-assessment and…

From FinTech to TechFin: The Regulatory Challenges of Data-Driven Finance

Financial technology (‘FinTech’) is transforming finance and challenging its regulation at an unprecedented rate. Two major trends stand out in the current period of FinTech development. The first is the speed of change driven by the commoditization of technology, Big Data analytics, machine learning and artificial intelligence. The second is the increasing number and variety…

Deploying Regtech Against Financial Crime

This report, written in cooperation with the IIF Regtech Working Group, looks at the potential of new technologies to improve anti-money laundering and anti-fraud capabilities at financial institutions (FIs). Examples include the use of machine learning to improve detection of suspicious activity, robotics to automate analysis, biometrics, and distributed ledger to improve data sharing through…

Turning the Revised Payment Services Directive into Digital Opportunity

In this note, Capgemini explores the business risks and opportunities for banks arising from the forthcoming implementation of the EU’s revised Payments Services Directive. PSD2 enforces an implementation deadline of January 2018. For those banks already progressing in their digital transformation, this is a reasonable timeframe to incorporate the nexessary technology and business change. For…

Regtech In Financial Services: Technology Solutions For Compliance And Reporting

“Regtech” is “the use of new technologies to solve regulatory and compliance requirements more effectively and efficiently. “ While regtech solutions are already being applied by financial institutions (FIs), the current innovations in technology and areas such as “fintech” indicate that we are only at the early stages of a regtech market, with more development…

RegTech is the new FinTech. How agile regulatory technology is helping firms better understand and manage their risks

Regulation is one of a number of services to receive the “Tech” treatment in recent times. As with its bigger brother FinTech, the definition of RegTech will mean different things to different people in this developing area. While the name is new, the marriage of technology and regulation to address regulatory challenges has existed for…

Principles for the Management of Credit Risk

Credit risk is most simply defined as the potential that a bank borrower or counterparty will fail to meet its obligations in accordance with agreed terms. The goal of credit risk management is to maximise a bank’s risk-adjusted rate of return by maintaining credit risk exposure within acceptable parameters. Banks need to manage the credit…

Consumer protection in SADC

Consumer protection legislation and institutional arrangements differ across countries and there is no single or superior arrangement. The appropriate institutional form depends on market circumstances, resource availability and the level of market sophistication. In the financial services sector, it is generally accepted that general consumer protection measures and consumer education are not sufficient, and that…

Financial Regulations for Improving Financial Inclusion

Poor regulation is one of the major obstacles to financial inclusion. Others include lack of good infrastructure, weak institutions and poor cooperation, and unstable economic and political conditions. The report of CGD’s Financial Access Task Force, however, focuses solely on regulatory issues for two main reasons. First, regulatory changes often are needed to enable the successful…

Proportional risk-based AML/CFT regimes for mobile money: A framework for assessing risk factors and mitigation measures

This publication from GSMA aims to help regulators understand the risks posed by mobile money services and the measures mobile money service providers are taking to mitigate these risks, both of which can help inform the design of efficient and proportional AML/CFT regulations. This publication will also help assessors understand mobile money services and the…

Mobile Money: Methodology for Assessing Money Laundering and Terrorist Financing Risks

Mobile money services are currently being deployed in many markets across the world. There is strong evidence that these services can improve access to formal financial services in developing countries. However, their rise has prompted concerns that mobile money services will be used for money laundering and terrorist financing (ML/TF). Whilst to date there has…

Understanding Financial Regulation And How It Works

This paper from GSMA gives an overview of financial regulation including AML and KYC in the context of mobile money transfers.  

Safeguarding Mobile Money

This paper from the GSMA focuses on how regulators can effectively safeguard customer funds when a nonbank issues mobile money. In countries where this is permitted, regulators and nonbank mobile money issuers have taken a number of steps to mitigate the risk that the latter will be unable to reimburse their customers. The purpose of…

A Guide to Regulation and Supervision of Microfinance

Most policy makers, donors, and private investors involved in microfinance now appreciate that poor and low-income people, like the rest of us, need a variety of basic financial services, not just credit. The ability of the market to respond to this demand depends not only on providers developing sustainable, low-cost ways to provide such services,…

Regulatory Options to Curb Debt Stress

This focus note from CGAP explores policy and regulation proposals for curbing debt stress. It argues that it is preferable to implement appropriate monitoring mechanisms and regulatory interventions at an early stage in credit market development, to detect potential debt stress and prevent reckless lending practices, thereby avoiding risks to financial markets, consumers, and the…

Designing Disclosure Regimes for Responsible Financial Inclusion

In East Africa, a microborrower who goes to pay off his loan early is surprised by a hefty prepayment penalty that was not mentioned in his loan agreement. A small business owner in Southeast Asia becomes frustrated trying to determine which of several loans is the least expensive–one comes with a flat charge, another a…

Supervision of Banks and Nonbanks Operating through Agents

To date, limited research has been undertaken about how providers identify, classify, and manage risks related to the use of agents and how supervisors assess providers for that matter. Further, this is an area that continues to develop rapidly alongside the dynamic path of evolution of financial inclusion through digital means and the increasing types…

Diagnostic Report on the Legal and Regulatory Environment for Branchless Banking in El Salvador

These notes offer details on CGAP’s findings and recommendations as a result of a branchless banking policy and regulatory diagnostic carried out in late 2008 in El Salvador.

Regulation of Branchless Banking in Brazil

This update of CGAP’s 2008 “Notes on Regulation of Branchless Banking in Brazil” incorporates research conducted by CGAP in January 2010. It is one of 11 country updates produced by CGAP as a part of the G20 Access through Innovation (ATI) Sub-Group’s workplan.

Fraud Detection in Mobile Payments Utilizing Process Behavior Analysis

Generally, fraud risk implies any intentional deception made for financial gain. This paper considers this risk in the field of services which support transactions with electronic money. Specifically, it applies a tool for predictive security analysis at runtime which observes process behavior with respect to transactions within a money transfer service and tries to match…

Mexico Financial Sector Assessment Program : Sistema de pagos Electonicos Interbancarios — Assessment of Observance of the CPMI-IOSCO Principles for Financial Market Infrastructure

The Sistema de Pagos Electrónicos Interbancarios (SPEI) is an important pillar of a complex payment and securities settlement infrastructure, through which the payments of various markets are settled with finality. In 2015, SPEI processed transactions for the equivalent of 10 times the country’s gross domestic product (GDP). It is supported by well-founded legal basis, and…

Deposit Insurance in Developing Countries

This paper by Ignacio Mas looks at deposit insurance in developing countries. About a dozen developing countries have deposit insurance systems and several others are considering establishing them. These systems are typically created to prevent contagious bank runs, to provide a formal national mechanism for handling failing banks, and to protect small depositors from losses…

Regulating New Banking Models that can bring Financial Services to All

Technology, and in particular the spread of real-time communications networks, permits banks to delegate ‘last mile’ cash management and customer servicing functions to third-party retail outlets. By making basic deposit, withdrawal, and payment functions available securely through retail shops that exist in every village and neighborhood, there is an opportunity to dramatically increase the physical…

Panel on Competition Policy in Card-Based Payment Systems: Commentary

This transcription is of Henry Ergas’s discussion of the papers that were presented in the Panel on Competition Policy in Card-Based Payment Systems session of the Antitrust Activity in Card-Based Payment Systems: Causes and Consequences conference.

Consumer Data Privacy in a Networked World: A Framework for Protecting Privacy and Promoting Innovation in the Global Digital Economy

The existing framework in the United States effectively addresses some privacy issues in our increasingly networked society, but additional protections are necessary to preserve consumer trust. The framework set forth in this document will provide these protections while promoting innovation. The Administration’s framework consists of four key elements: A Consumer Privacy Bill of Rights, a…

Managing the Risk of Fraud in Mobile Money

This paper outlines a framework to managing fraud and risk. The four key elements of that framework are: (i) determine risk appetite; (ii) identify and assess risks; (iii) establish effective controls; and (iv) monitor and review the risk management strategy. In our research, MMU found that operators are aware of the need to develop a…

Privacy and Security Concerns Associated with Mobile Money Applications in Africa

The rapid adoption of mobile money use in Africa raises concerns regarding the privacy and security of users, particularly in light of Financial Action Task Force recommendations requiring user transparency and the collection of transaction data. The transparency required of the now-financially-included—particularly in nations with weak adherence to the rule of law and limited privacy…

Central Bank Oversight of Payment and Settlement Systems

Most of this report is descriptive and analytical, explaining why and how central banks oversee payment and settlement systems. It looks at the need for oversight, the source of central banks’ responsibilities for oversight, the scope of oversight and the activities that oversight involves. In addition it looks at cooperative oversight, where more than one…

General Guidance for Payment System Development

The report considers the concepts and development factors that formulate the framework and context for the general guidance. Section 3 presents the general guidelines on payment system development in separate sections for banking, planning, institution-building and infrastructures. Each guideline includes a descriptive statement, an explanation of its primary role in CPSS – General Guidance consultative…

Final Report: Market Review into the Ownership and Competitiveness of Infrastructure Provision

This report discusses findings of a market review into the ownership and competitiveness of infrastructure that supports the three major UK payment systems: Bacs, Faster Payments Service (FPS), and LINK.

Shifting Branchless Banking Regulation from Enabling to Fostering Competition

Branchless banking solutions in most countries tend to be dominated by a few large players, and exhibit low levels of innovation. The paper argues that there is a need to evolve the regulatory framework for branchless banking from one that enables participation by banks and telcos to one that fosters competition by a broader range…

Introduction to the National Payments System

The National Payments System (NPS) controls how participants at all levels — from the person on the street to banks, governments and international participants — exchange value within an economy and across national borders. In practice, the NPS is the framework of laws, regulations, systems, mechanisms, procedures and agreements (commercial, process and risk management) that…

Consumer Protection Issues for Digital Financial Services in Emerging Markets

Innovative digital financial services (DFS) are held out as a key solution for greater financial inclusion assisting low-income households to overcome poverty using lower cost methods for managing their finances. However, DFS roll-outs have been plagued by infrequent end-user usage despite high registration numbers. Active usage depends on many factors, however, one crucial factor is…

Digital Financial Services Regulatory Handbook

This handbook has been designed to assist those responsible for regulating and supervising the use of DFS in emerging markets. A conservative one-size-fits-all regulatory approach is not appropriate for DFS because it is likely to stifle innovation, discourage new market entrants and inhibit the use of DFS to improve financial inclusion. By analysing the nature,…

Supervision of Banks and Nonbanks Operating through Agents

To date, limited research has been undertaken about how providers identify, classify, and manage risks related to the use of agents and how supervisors assess providers for that matter. Further, this is an area that continues to develop rapidly alongside the dynamic path of evolution of financial inclusion through digital means and the increasing types…

Doing Digital Finance Right: The Case for Stronger Mitigation of Customer Risks

The paper from CGAP reviews available evidence on DFS consumers’ risk perceptions and experiences, focusing on risks that can cause financial loss or other harm. Its main goal is to advance responsible digital finance by helping the diverse industry actors engaged in DFS delivery better understand which problems are most important from the consumer perspective…

Developing and Implementing AML/CFT Measures Using a Risk-Based Approach for New Payments Products and Services

This paper analyses and explains FATF’s Risk-Based Approach (RBA) for new payment methods to support countries and institutions in their efforts to use a RBA to improve financial inclusion.

Developing a Comprehensive National Retail Payments Strategy

Reforms in the area of retail payments are becoming increasingly important. Given the nature of retail payment systems and the structure of the retail payments industry, there are multiple challenges and roadblocks that impede those much needed reforms. Navigating through these challenges requires a comprehensive and strategic approach. In this document, the Payment Systems Development…

General Guidelines for the Development of Government Payment Programs

Governments, regardless of their country’s stage of economic development, make payments to, and collect payments from individuals and businesses. Financial resources are also transferred between the various government agencies. These flows cover a wide range of economic sectors and activities, and in most cases the overall amount of such flows is significant, for example in…

Principles for Financial Market Infrastructures

The Principles for Financial Market Infrastructures are the international standards for financial market infrastructures, ie payment systems, central securities depositories, securities settlement systems, central counterparties and trade repositories. Issued by the CPMI and the International Organization of Securities Commissions (IOSCO), the PFMI are part of a set of 12 key standards that the international community considers…