Page 333 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

represented 14.4 per cent of the total global value of mobile money transactions in June 2015, and person-
to-person (P2P) transfers remained the predominant use case. 7

In 2013, the Agent Network Accelerator (ANA) surveys by The Helix Institute showed that 23 per cent of agents
in Tanzania , 30 per cent in Uganda , (although only 3 per cent in Kenya ) were offering direct deposits. Direct
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deposits are also prevalent in West Africa.

3 Are OTC as problematic as we thought?

In the previous section, we created an inclusive definition for OTC, based on the different usage behaviours
we see, and then developed a simple framework for thinking about how each of them should be treated. In
this section, we highlight the key concerns that the industry has and analyse how valid these concerns are
with respect to the OTC methodology.

3.1 Problem 1: OTC increase anti-money laundering (AML) / combating the financing of
terrorism (CFT) risks

Informal OTC transactions, where either the sender or recipient or both are not identified, can increase the
risk of money laundering and terrorism financing. To date, regulators may take two approaches to mitigate
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this risk: a) formalise this type of OTC so that it can be regulated within a market, or b) ban it altogether. We
find the latter option overly prescriptive and favour giving the providers, and the mobile money users, the
opportunity to choose. Principle 8 of the G20 Principles for Innovative Financial Inclusion states that regulators
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and providers alike should build a policy and regulatory framework that is proportionate with the risks involved
in such innovative products and services, and is based on an understanding of the gaps and barriers in existing
regulation. Thus, while it is important to stipulate that both the sender and recipient (in a P2P transaction)
must be identified to mitigate money laundering and terrorism financing risks, whether or not account
registration is part of that process should be left to the market to determine.

3.2 Problem 2: OTC limits product evolution

By registering and activating mobile money users, providers can use mobile money accounts as a conduit to
offer mobile money users more products, catalysing a more robust ecosystem. This, in turn, both generates
more revenue for the provider, and more value for the client, as these services can better address their financial
needs. Furthermore, services that successfully build mature, ecosystem-based deployments can expect healthy

7 Ibid.
8 Mike McCaffrey, Leena Anthony, Annabel Schiff, Kimathi Githachuri, Graham A.N. Wright. Agent Network Survey: Tanzania
Country Report 2013, April 2014. http:// www. helix- institute. com/ data- and- insights/ agent- network- survey- tanzania- country-
report- 2013
9 Kimathi Githachuri, Mike McCaffrey, Leena Anthony, Annabel Schiff, Anne Marie van Swinderen, Graham A. N. Wright. Agent
Network Accelerator Survey – Uganda Country Report 2013, Jan. 2014. http:// www. helix- institute. com/ data- and- insights/ agent-
network- accelerator- survey- %E2%80 %93- uganda- country- report- 2013- 0
10 Aakash Mehrotra, Sheharyar Khan, Leena Anthony, and Dorieke Kuijpers. Agent Network Accelerator Survey – Kenya Country
Report 2014, May 2015. http:// www. helix- institute. com/ data- and- insights/ agent- network- accelerator- survey- kenya- country-
report- 2014
11 GSMA. Proportional risk-based AML/CFT regimes for mobile money, 2015. http:// www. gsma. com/ mobilefordevelopment/
programme/ mobile- money/ proportional- risk- based- amlcft- regimes- for- mobile- money- a- framework- for- assessing- risk- factors-
and- mitigation- measures/
12 See GPFI website http:// www. gpfi. org/ sites/ default/ files/ documents/ G20%20 Principles%20 for%20 Innovative%20 Financial%20
Inclusion%20 -%20 AFI%20 brochure. pdf

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