Lack of banking drives cashless mobile-money services


page image

Terror-financing risks make banks scarce and drive use of mobile money

With most traditional banks too wary of terror-financing risks to offer banking services, mobile-money services in some parts of Africa have gained a strong foothold.

A Wall Street Journal feature this week explores the rise in mobile-money services where one’s cell phone doubles as a wallet in near-cashless regional economies. According to the story, nearly half of the population of Kenya uses a phone-based mobile-money service, and “more than half of the world’s 282 mobile-money platforms are in sub-Saharan Africa, research by McKinsey & Co. shows.”

The Journal details mobile-money use in Somaliland, a region of Somalia that has self-declared its independence. Because it’s not recognized by other nations as a sovereign nation and because it’s cut off from most international banking options due to terror-financing risks that banks face in Somalia, nearly a quarter of the 3.5 million residents of Somaliland rely almost exclusively on a mobile-money app provided by their local telecom company, according to the Journal report.

Somaliland prints its own paper currency, but the U.S. dollar is much preferred due to exchange rates and local economic issues. Without access to commercial banks and facing the logistical and security challenges of moving large amounts of cash, business owners in the region tend to opt for mobile-money services to distribute payroll and pay bills.

Mobile-money services are not subject to regulation by the Central Bank, and so they are not subject to the standard terror-financing regulations and other regulatory restrictions common to commercial and retail banks, according to the Journal. Money changers who employ security teams take paper notes in exchange for crediting the mobile-money accounts of depositors.

For Somaliland and for other regions in Africa, the move toward a cashless economy and a reliance on mobile-money services will likely continue, according to the Journal, due to the absence of traditional banking services and the logistical and security risks of using cash.


RegTech Platform and Global Software Ecosystem for AML/CTF and BSA/AML

With AML Partners’ platform technology for RegTech, updating and upgrading your AML and eGRC software solutions is easier, faster, and much less expensive. Contact us today to explore how platform technology and our end-to-end AML Ecosystem SURETY Eco and the SURETY modules –powered by the RegTech One platform–can transform the efficiency and effectiveness of your unique AML Compliance efforts. SURETY Eco includes fully integrated modules for CDD/KYC on-boarding, behavior/transaction monitoring, and sanctions screening. And AML Partners simplifies your end-to-end fully integrated AML Compliance efforts even further with an optional Subpoena Search module for FinCEN 314a and similar subpoena searches. Contact us today to learn more or schedule a demo of SURETY Eco, the AML Ecosystem powered by the RegTech One platform. With extraordinary configurability and built for API extensibility, the RegTech One platform powers not only an end-to-end AML ecosystem but also CECL workflows, vendor management, cyber risk workflows, FCPA workflows, and so much more.