Enabling Regulatory Environment

Regulatory support of financial inclusion initiatives remains critical. The Level One Project supports the four key regulatory enablers for digital financial inclusion, as outlined by CGAP in ‘Basic Regulatory Enablers for Digital Financial Services’

Non-Bank eMoney Issuance

Licensing requirements for prepaid or stored value accounts

Key Regulatory Issues:

• Regulatory framework for e-money
• Who can issue e-money
• Capital requirements for providers
• E-float requirements
• Services allowed to be offered (accounts, cash-in and cash-out (CICO), provide transfers, provide credit, hold deposits)
• Rules for handling and storage of customer funds for non-banks
• Wallet / Account limits

Use of Agents

Permissibility of third-party providers in the DFS value chain

Key Regulatory Issues:

• Eligibility requirements for being an agent
• Type of entities that can act as agents
• Services agents are allowed to perform
• Type(s) of training is required
• Agent exclusivity allowed
• Responsibility for actions of the agent

Risk-Based Customer Due Diligence (CDD)

Proportionality of regulation with the functionality of the account or service

Key Regulatory Issues:

• Application of regulations for customer identification, anti-money laundering, counter financing of terrorism
• Acceptable customer identification
• Remote wallet registration
• Proportional due diligence based on the type of customer and amounts transacted

Consumer Protection

Preventing bad practices and ensuring consumer confidence

Key Regulatory Issues:

• Ensuring understanding of rights and responsibilities, including for consumers with limited literacy/numeracy
• Requirements for contracts with users, use of simple terms and local languages
• Transparency of fees
• Customer redress and dispute resolution
• Fraud
• Quality of service issues

Next Topic in this Section: Government Support of System