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    Mobile Banking Regulation - IBA

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    Mustapha Mugisa
    The growth of mobile money (MM) is phenomenal. MM is no longer a value added service in itself, but a platform that enables the telecom to add more services. Most telecoms now use MM as a competitive tool. One of the top challenges of mobile money implementation has been inability of the telecom firms to anticipate demand for mobile money services. The demand has always been above projections. This has meant reactive system upgrades with the expected long lead times and implementation glitches. In this case, we explore the common mobile money frauds and opportunities that exist. The names in this case are synonyms. It is based on actual research. You will learn about the common fraud schemes and how to investigate the same and protect your own business.

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    Mobile Banking Regulation - IBA

    Uploaded by

    Mustapha Mugisa
    114 views18 pages
    The growth of mobile money (MM) is phenomenal. MM is no longer a value added service in itself, but a platform that enables the telecom to add more services. Most telecoms now use MM as a competitive tool. One of the top challenges of mobile money implementation has been inability of the telecom firms to anticipate demand for mobile money services. The demand has always been above projections. This has meant reactive system upgrades with the expected long lead times and implementation glitches. In this case, we explore the common mobile money frauds and opportunities that exist. The names in this case are synonyms. It is based on actual research. You will learn about the common fraud schemes and how to investigate the same and protect your own business.

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    Mobile Banking Regulation_IBA

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    The growth of mobile money (MM) is phenomenal. MM is no longer a value added service in itself, but a platform that enables the telecom to add more services. Most telecoms now use MM as a competitive tool. One of the top challenges of mobile money implementation has been inability of the telecom firms to anticipate demand for mobile money services. The demand has always been above projections. This has meant reactive system upgrades with the expected long lead times and implementation glitches. In this case, we explore the common mobile money frauds and opportunities that exist. The names in this case are synonyms. It is based on actual research. You will learn about the common fraud schemes and how to investigate the same and protect your own business.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    114 views18 pages

    Mobile Banking Regulation - IBA

    Uploaded by

    Mustapha Mugisa
    The growth of mobile money (MM) is phenomenal. MM is no longer a value added service in itself, but a platform that enables the telecom to add more services. Most telecoms now use MM as a competitive tool. One of the top challenges of mobile money implementation has been inability of the telecom firms to anticipate demand for mobile money services. The demand has always been above projections. This has meant reactive system upgrades with the expected long lead times and implementation glitches. In this case, we explore the common mobile money frauds and opportunities that exist. The names in this case are synonyms. It is based on actual research. You will learn about the common fraud schemes and how to investigate the same and protect your own business.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 18

    Mobile banking regulation in EA perspectives, challenges and next steps

    Mustapha B. Mugisa
    Forensic Specialist & Fraud Examiner.

    Agenda
    1.Mobile banking regulation 2.MM perspectives 3.Next steps

    Forensic. Advisory. Fraud

    The future is in the mobile

    Mobile money main target; >80% of the population

    Mobile banking regulation


    1. No specific regulation for mobile banking 2. Telecoms must partner with banks to offer mobile money 3. Central bank regulates mobile banking through banks
    Financial Institutions Act, 2004 Anti money laundering regulation, 2010 key focus is on KYC. SIM registration to help. Draft anti-money laundering bill E-banking guidelines, Basel II

    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

    Other legislation
    1. Computer Misuse Act 2011 for safety and security of IT systems 2. Electronic Transactions Act, 2011 3. Electronic Signatures Act, 2011

    Mobile banking factsheet

    Mobile banking ecosystem...


    Regulator UCC NITA Uganda

    Merchants - PayTv - Utilities, etc. Point of Sale - PoS integration - Interconnection - Bank account
    Regulator BOU NITA Uganda

    Subscribers - Bank account - SIM card/ telephone #

    Mobile Network Operators (MNOs) e.g. MTN/ UTL, etc.

    Agent network - MM agents - ATMs - People

    Bank Banking system POS process support

    Mobile banking services


    Category Service a) Mobile
    transfers 1) Domestic 2) Regional (Kenya Uganda) 3) International (through WU) 1) Buy airtime 2) Loan repayments 3) Utility bills 4) Churches & NGOs contributions 5) Hotels, health, education, bills payments 6) Bulk payments biz to customer (e.g. salaries)

    Platform
    All MM providers (1) and M-Pesa (2&3) Safaricoms mPesa supports all

    b) Mobile
    payments

    Mobile banking services


    Category Service Platform

    c) Mobile 1) MM wallet linked to financial bank account &/or services ATM card 2) ATM cardless mobile money withdrawals 3) Microloans and repayments 4) Insurance premiums payments

    Mostly in Kenya [MPesa; Orange money (Iko pesa); YuCash; Airtel money]

    Key features of mobile money...


    Registration, transaction limits & record keeping - Poor records management at agents - High money laundering risk
    Access channels SMS USSD SIM Toolkit (STK) Unstructured Supplementary Service Data (USSD) is session based

    Security
    Mobile Network Operators (MNOs) e.g. MTN/ UTL, etc. - SMS/ USSD data is not encrypted - Weak authentication (PIN) - No user training

    Agent network & user awareness Lack of liquidity High fraud (fake money) Weak governance

    Areas of regulatory concern...


    Category Service 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? o Platform integrity o Privacy issues o Transaction limits o Competition o Cross-border transfers

    1. Exchange
    between cash and mobile money

    2. Transfer of
    money between different parties

    Areas of regulatory concern...


    Category Service Consumer protection Access control Privacy issues Platform integrity Diversification of investments Eligibility of banks Safety of deposits Interest earned o o both mobile money and cash o o 4. Investment o of net balances o o o

    3. Storage of

    Next steps

    Key pointers for regulators


    o Consumer protection Kenya has draft e-money regulation. o MM agents - How should they be regulated? o Interoperability how to enable linkages? o Regulatory collaboration (EAC) o Registration and transactional limits

    Forensic. Advisory. Fraud

    Q&A
    Thanks for your time
    Mustapha Mugisa, CFE, CEH, CISA, MBA, CPA, CrFA Forensic specialist & fraud examiner 0712984585, [email protected]

    Title of your presentation

    References
    Klein, Michael and Mayer, Colin. (2011) Mobile Banking and Financial Inclusion: The Regulatory Lessons. Working Paper No. 166, Frankfurt School of Finance & Management. Interviews of BOU, UCC, Mobile money operators and their agents UNCTAD mobile money & development in EAC 2012 report Njega A. (2011) Mobile banking, usage and experiences in Kenya Mustapha M. (2012) Mobile banking in EAC, Summit Business Review.

    SCL has been consistently ranked by our clients as the best consulting partner.
    We specialize in digital

    forensics, legal support and cyber investigations.

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