mobile banking regulation_iba

7/31/2019 Mobile Banking Regulation_IBA

1/18

Forensic Specialist & Fraud Examiner.

Mustapha B. Mugisa

Mobile banking regulation inEA perspectives,

challenges and next steps


2/18

Forensic. Advisory. Fraud

Agenda

1.Mobile bankingregulation

2.MM perspectives3.Next steps


3/18

The future is in the mobile

Mobile money main target; >80% ofthe o ulation


4/18

Mobile banking regulation

1. No specific regulation for mobile banking

2. Telecoms must partner with banks to offermobile money

3. Central bank regulates mobile bankingthrough banks

Financial Institutions Act, 2004

Anti money laundering regulation, 2010 keyfocus is on KYC. SIM registration to help.

Draft anti-money laundering bill

E-banking guidelines, Basel II


5/18

Telecoms regulations

1. Regulated by Uganda Communications

Commission (UCC) UCC Act (Cap 106).

2. UCC Act sets parameters for performance Quality of service (QoS) e.g. system up time

should be > 99%

Customer complaints handling (90% complaints

handled within 24 hours)

Fault recovery, 90% handled within 24 hours)

Customer (subscriber) registration


6/18

Other legislation

1. Computer Misuse Act 2011 for

safety and security of IT systems

2. Electronic Transactions Act, 20113. Electronic Signatures Act, 2011


7/18

Mobile banking

factsheet


8/18

Subscribers- Bank account

- SIM card/

telephone #

Point of Sale- PoS

integration

- Inter-

connection

- Bank account

Bank Banking system

POS process

support

Mobile NetworkOperators

(MNOs) e.g.MTN/ UTL, etc.

Mobile banking ecosystem...

Regulator UCC

NITA Uganda

Agent network- MM agents

- ATMs

- People

Regulator BOU

NITA Uganda

Merchants- PayTv- Utilities, etc.


9/18

Mobile banking services

Category Service Platform

a) Mobiletransfers

1) Domestic

2) Regional (Kenya

Uganda)

3) International (through WU)

All MM

providers (1)

and M-Pesa

(2&3)

b) Mobilepayments

1) Buy airtime

2) Loan repayments

3) Utility bills

4) Churches & NGOs

contributions5) Hotels, health, education,

bills payments

6) Bulk payments biz to

customer (e.g. salaries)

Safaricoms m-

Pesa supports

all


10/18

Mobile banking services

Category Service Platform

c) Mobilefinancialservices

1) MM wallet linked to

bank account &/or

ATM card

2) ATM cardless mobilemoney withdrawals

3) Microloans and

repayments

4) Insurance premiumspayments

Mostly in

Kenya [M-

Pesa; Orange

money (Ikopesa);

YuCash; Airtel

money]


11/18

Registration,transactionlimits & record

keeping- Poor records

management

at agents

- High moneylaundering

risk

Security

- SMS/ USSD datais not encrypted

- Weak

authentication

(PIN)

- No user training

Agent network & userawareness Lack of liquidity

High fraud (fake money) Weak governance

Mobile NetworkOperators

(MNOs) e.g.MTN/ UTL, etc.

Key features of mobile money...Access channels SMS

USSD

SIM Toolkit (STK)

Unstructured

Supplementary Service

Data (USSD) is session

based


12/18

Areas of regulatory concern...Category Service

1. Exchangebetween cash

and mobile

money

o Who can issue mobile money?

o How to appoint and manage agents?

o Are we compliant with Anti-Money

Laundering (AML) laws via KYC?

o Are MM systems transparent?

o How to monitor exchange rates?

2. Transfer of

money betweendifferent parties

o Platform integrity

o Privacy issues

o Transaction limitso Competition

o Cross-border transfers


13/18

Areas of regulatory concern...

Category Service

3.Storage ofboth mobile

money and cash

o Consumer protection

o Access control

o Privacy issues

o Platform integrity

4. Investment

of net balances

o Diversification of

investments

o Eligibility of bankso Safety of deposits

o Interest earned


14/18

Next steps


15/18

Key pointers for regulators

o Consumer protectionKenya has draft e-moneyregulation.

o MM agents - How should

they be regulated?o Interoperability how to

enable linkages?

o Regulatory collaboration(EAC)

o Registration andtransactional limits


16/18

Q&AThanks for your time

Mustapha Mugisa, CFE, CEH, CISA, MBA, CPA, CrFA

Forensic specialist & fraud examiner

0712984585, [email protected]

Title of your presentation

Forensic. Advisory. Fraud


17/18

References Klein, Michael and Mayer, Colin. (2011)

Mobile Banking and Financial Inclusion: TheRegulatory Lessons. Working Paper No. 166,Frankfurt School of Finance & Management.

Interviews of BOU, UCC, Mobile moneyoperators and their agents

UNCTAD mobile money & development inEAC 2012 report

NjegaA. (2011) Mobile banking, usage andexperiences in Kenya

Mustapha M. (2012) Mobile banking in EAC,Summit Business Review.


18/18

SCL has been

consistently ranked byour clients as the best

consulting partner.

We specialize in digital forensics, legalsupport and cyber investigations.

mobile banking regulation_iba

Documents