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Protecting Mobile Money against Financial Crimes
Table 2.2 Comparative Risks of M-Money and Cash, Before and After Controls Are Applied General risk factor
M-money Cash
Before
Anonymity
HP
SP
Elusiveness
HP
SP
Rapidity
LR
HP
Poor oversight
HP
LR
Controls Customer profile building to include registration information (name, unique phone number, and so forth) Limits on amount, balance, frequency, and number of transactions Real-time monitoring Real-time monitoring Frequency restrictions on transactions Restrictions on transaction amount and total account turnover in a given period Controls that vary by country
After LR
LR
LR
LR
Source: GSMA risk assessment methodology (Solin and Zerzan 2010). Note: HP = highly prevalent risk; LR = low risk; SP = somewhat prevalent risk.
in the level of physical cash. Thus, the overall level of ML/TF risk involved with having physical cash in Japan may also have declined. The advance of electronic money systems in Japan has largely been the result of carrying electronic purses on NFC-enabled18 mobile phones. A report published by the Bank of Japan (2008) has documented this trend, showing the rate of increase in the amount of large coins (¥500 and ¥100) and an actual decrease in the amount of smaller coins (¥50, ¥10, ¥5, and ¥1) in circulation19 (see figure 2.1). M-money therefore can be used strategically to lower national ML/TF risk by facilitating the move away from higher-risk cash transactions to lower-risk m-money transactions.
Risk and Vulnerability Assessment It is possible to argue that integrity risks arising from m-money are low by determining m-money’s vulnerability to abuse and its threat of abuse by prospective criminals (vulnerability + threat = risk). “Vulnerability” can be defined as a weakness in a specific system or sector arising from weak control measures that are endogenous in nature. Vulnerability also arises from the inherent nature or environment of the particular sector as a result of the products and services offered.