Transcript Mobile Finances & International Mobile Remittances, Kirk

USEFUL GLOBAL STATISTICS
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.
Why Mobile Banking?
• Financial Inclusion
 Unbanked
 Disaster Relief
 Conflict Zones
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)
“Teller’s Window”
Risk Factors
Risk Perceptions
Risk Factors
Unknown Identity
False Identification
Smurfing
Anonymity
Pooling & Delegation
Elusiveness
Speed
Rapidity
M-FS Providers Fall Outside
of Regulations
Poor Oversight
M-PESA: The Gold Standard
• 2005 Pilot: PrivatePublic 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
Customer Must use Agent
 Anytime. Anywhere. Anyone.
Receive and Repay Loans
Send/Receive Money
Buy Airtime
Receive salaries
Pay bills
Customer Does Not Need to Visit
Agent
International Remittances
The World Bank
Will Mobile Finance Replace MSBs?
Hawaladars
Mobile Finance
• Inexpensive
• Inexpensive
• Efficient
• Efficient
• Reliable
• 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
Potential Terrorist Finance Threat!
Taliban
Al-Shabaab
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
Customer Identification
• Basel Core Principles
• Special Recommendations VI
(Alternative Remittances) “Each
• FATF Recommendation 5
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”
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
Internal Controls & Monitoring
• FATF Recommendation 10
• FATF Recommendation 15
Requires financial institutions to maintain all
necessary records on domestic and
international transactions for at least five
years following the completion of the
transaction.
Requires 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.
QUESTIONS?