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Protecting Mobile Money against Financial Crimes
bank then manually approves those commands and adjusts the customers’ bank accounts accordingly. The maximum involvement an MNO can have is covering every function to the point of account record management (the account provision step). In m-money programs that include that much network operator involvement, MNOs generally use a bank solely to handle the physical cash deposited into the system and for ultimate settlement with retail outlets. MNOs observed in fieldwork performing this function also performed all functions preceding it. The most prominent example of this model is the Safaricom model in Kenya. The MNO Safaricom manages the transaction to the point of settlement with retail outlets (which it leaves to the partner banks).
The Bank Bank involvement can be traced from the other side of the money flow chart. Banks in fieldwork were always the entity providing the ultimate physical cash settlement in an m-money program. At a minimum, they were responsible for holding the funds. If their involvement ends there, it is management of a pooled account under the name of the MNO (or its designate). This is precisely the case of Safaricom in Kenya. Because the MNO manages records, processes the transaction, and provides both the interface and the mobile service, the bank has only to hold the money in a trust account.8 It does not “see� the day-to-day transactions of customers, but merely the withdrawals from or deposits to the system by retail outlets who have bank accounts at the same bank. In some systems, including that of Safaricom, even the settlement function is carried out by multiple banks where there are several pooled accounts.9 If a bank deals with account provision in addition to a settlement function, its participation in the program is greatly enhanced. Account record management means the bank is involved in each transaction in the system. Fieldwork found that when a bank managed this step of the process, the accounts were invariably their own bank accounts as well. That is important because bank accounts are open (except for their regulatory restrictions10) and, therefore, directly interoperable with the broader financial system. They can be used to move money to or from nonusers of the m-money system. In most (but not all) cases in which banks manage account records, banks are also central to the transaction-processing function.11 Banks that