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World Population: 7,244,272,280 (July 2014) Active Mobile Phones: 7,300,000,000 (2014) Unbanked:...
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Transcript of World Population: 7,244,272,280 (July 2014) Active Mobile Phones: 7,300,000,000 (2014) Unbanked:...
World Population:7,244,272,280 (July 2014)
Active Mobile Phones: 7,300,000,000 (2014)
Unbanked: 2,500,000,000
Unbanked With Mobile Phones: 1,000,000,0000
International Migrant Workers:232,000,000 (2013)
International Remittances:542,000,000,000 (2013)Note: Does not include informal transfers.
USEFUL GLOBAL STATISTICS
Mobile Financial Services Mobile Financial Information Services•Access data related to personal and/or general financial information
Mobile Banking & Securities Account •Electronic channel to access financial services to execute financial transactions relative to bank or securities accounts
Mobile Payment Services•Allows non-bank account holders to make payments, through a bank or non-bank entity (e.g. mobile operator, credit card company)
Mobile Money •Value stored on mobile phone or mobile phone account for the purpose of issuance, intermediation, multi-purpose use & and redemption of electronic money
M-Wallet
• Loaded with money prior to use via bank or loading partner
• Funds securely accessed from the mobile phone
• More convenient than Prepaid Cards
• Employers can pay salaries• Pay for goods or services or
transfer money through SMS or Near Field Communications (NFC)
Risk FactorsRisk Perceptions Risk Factors
Unknown IdentityFalse IdentificationSmurfing
Anonymity
Pooling & Delegation Elusiveness
Speed Rapidity
M-FS Providers Fall Outside of Regulations
Poor Oversight
M-PESA: The Gold Standard
• 2005 Pilot: Private-Public Partnership
• Launched in 2007• 2/3rds of Kenyan
adults utilize it• 25% of GDP
transactions
Future Developments
• 2016 Asia Positioned To Surpass Africa in Mobile Transactions
• Safaricom: Transitioning from being a wireless carrier with a M-Wallet to a wireless company with a full range of banking services
• M-Shwari New product associated with M-Pesa Establish interest bearing bank savings accounts without having to visit bank or fill out any forms Move money in and out of M-Shwari savings account to M-Pesa
account without charge Micro-credit anytime and receive loan instantly to M-Pesa account
What is M-Paisa? Secure, fast and cost effective way to move money using a Mobile phone
Targeted at the “unbanked” population
Transactions at an agent:Deposit Cash-Exchange cash for e-money
Withdraw Cash-Exchange e-money for cash
Anytime. Anywhere. Anyone.Receive and Repay Loans
Send/Receive Money
Buy Airtime
Receive salaries
Pay bills
Customer Does Not Need to Visit Agent
Customer Must use Agent
Will Mobile Finance Replace MSBs?
Hawaladars
• Inexpensive
• Efficient
• Reliable
Mobile Finance
• Inexpensive
• Efficient
• Reliable
Airtime = Currency
Process:
Code to unlock airtime is sent via text message.
Recipient trades the code for cash or goods, making airtime a virtual currency.
Besides being used to obtain cash or goods, there have been reported instances of airtime being used to pay small bribes too.
International Recharge (Top Up) Services
Mobile Money Remittance: Mobile minutes are a widely accepted and valuable form of currency in many countries.
Small Sums To Fund Terrorism• Westgate Mall (Kenya) Attack: 61 dead &
175 wounded• Annual Income in Somalia: $140.00• Daily Cost Per Al-Shabaab Soldier: $1.00• U.S. Fundraising:
– Two Minnesota women held a teleconference and obtained pledges from 21 people totaling $2,100.00
– Minnesota man created fake charity for Somali orphans and raised $1,500.00
– San Diego taxi driver raised $8,500.00– San Diego woman raised $1,450.00– St. Louis taxi driver raised $21,000.00
FATF Recommendations For Mobile Financial Services
• Licensing & Registration Process
• Customer Identification• Record Keeping• Internal Controls &
Monitoring
FATF Recommendations to Mobile Financial Services
Licensing & Registration Process• Basel Core Principles• Special Recommendations VI
(Alternative Remittances) “Each country should take measures to ensure that…legal entities, including agents, that provide a service for the transmission of money or value, including transmission through an informal money or value transfer system or network (mobile remittances) should be licensed or registered and subject to all the FATF recommendations that apply to banks and non-bank financial institutions”
Customer Identification• FATF Recommendation 5 Outlines CDD and KYC principles.
• FATF Recommendation 8 “Financial Institutions should pay special attention to any money laundering threats that may arise from new or developing technologies that might favor anonymity, and take measures, if needed, to prevent their use in money laundering scheme.”
FATF Recommendations to Mobile Financial Services
Record Keeping
• FATF Recommendation 10Requires financial institutions to maintain all
necessary records on domestic and international transactions for at least five years following the completion of the transaction.
Internal Controls & Monitoring
• FATF Recommendation 15Requires financial institutions (banks and
non-banks) to develop AML and CFT programs. These programs should include, among others, internal policies, procedures, and controls, including appropriate compliance management arrangements and an audit function to test the system.