94
Protecting Mobile Money against Financial Crimes
Box 3.11
Examples of Countries Where Providers Assume Liability for Retail Outlets In Brazil, the principal is fully responsible for the services rendered by its retail outlets. The central bank requires the principal (1) to control the activities of each of its retail outlets by setting transaction limits and implementing mechanisms to block transactions remotely when necessary; and (2) to ensure compliance with all applicable legal and regulatory provisions, such as AML/CFT, customer protection, and data privacy. A retail outlet must post a notice in its establishment that it acts on behalf of the bank. In Colombia, in the contract between the financial institution and the retail outlet, there is a clear reference to the financial institution’s liability for its retail outlets’ actions. In Mexico, under current regulations for any type of m-money business model, the liability for regulatory compliance with AML/CFT must fall ultimately on the bank (not telecoms or third-party providers). Thus, a bank-based model has been established. M-money services can be used only if one has a formal bank account with the m-money provider. (Legally speaking, the authorities recognize only the bank as the ultimate provider.) In Peru, final liability rests with the AP, not the retail outlets. In the Philippines, the e-money circular explicitly states that it is the responsibility of the institutions to ensure that their retail outlets comply with all AML laws, rules, and regulations. Section 4 (e) states, “it is the responsibility of the electronic money issuers to ensure that their distributors/e-money agents comply with all applicable requirements of the Anti-Money Laundering laws, rules and regulations.” Source: Authors.
and supervising thousands of retail outlets in accordance with FATF Recommendations 23, 24, and 29 would be impractical and almost impossible, especially in poor countries where supervisory resources are already scarce. However, this does not mean that retail outlets are free of any scrutiny. In fact, scrutiny should be performed by the AP, which should be held accountable and responsible for compliance by the retail outlets. APs’ policies, procedures, training, and monitoring