Publication: Integrity in Mobile Phone Financial Services : Measures for Mitigating Risks from Money Laundering and Terrorist Financing
Loading...
Date
2008
ISSN
Published
2008
Editor(s)
Abstract
This working paper explores strategies to identify and manage potential money laundering (ML) and terrorist financing (TF) risks in mobile financial services (m-FS). Using fieldwork in seven economies as a basis, the paper provides guidance on the best means of assessing perceived versus actual ML and TF risks, and then identifies specific measures to mitigate the actual risks. The paper concludes with recommendations that aim to promote a regulatory balance to foster an enabling environment for business while minimizing ML and TF risks that hinder its sustainability. The paper identifies four risk factors in m-FS and appropriate mitigation responses. The risk factors are anonymity, elusiveness, rapidity, and poor oversight. Anonymity is the risk of not knowing a customer's actual identity, and it can be diminished through enhanced know-your-customer procedures and identification tools. Elusiveness is the ability to disguise mobile transaction totals, origins, and destinations. It can be diminished through transaction limits and enhanced customer profiling, monitoring, and reporting. Rapidity is the speed with which illicit transactions can occur. Its risk is checked by flagging certain types of transactions and managing risks of third-party providers. The fourth type of risk is poor oversight, which can be mitigated by transparent guidelines on mobile services, clearer licensing, regulation of providers, and effective risk supervision within bank and non-bank m-FS providers.
Link to Data Set
Citation
“Chatain, Pierre-Laurent; Hernández-Coss, Raúl; Borowik, Kamil; Zerzan, Andrew. 2008. Integrity in Mobile Phone Financial Services : Measures for Mitigating Risks from Money Laundering and Terrorist Financing. World Bank Working Paper; No. 146. © World Bank. http://hdl.handle.net/10986/6530 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication Environmental Implications of a Central Bank Digital Currency (CBDC)(Washington, DC : World Bank, 2022-07)Two-thirds of central banks in the East Asia and Pacific (EAP) region have started researching or testing the implementation of a Central Bank Digital Currency (CBDC). At the same time, the region accounts for one-third of world CO2 emissions and is vulnerable to climate risks. As the Group of 7 (G7), European Central Bank (ECB), and Bank of England (BoE) have stated in their public statements, it is increasingly important to consider environmental impact when designing CBDC. However, only a few brief studies have been done on this subject, which will be crucial for the region. This Note explores the environmental implications of CBDC by comparing technical mechanisms and energy consumption within its distributed structure. It also illustrates differences in ecological footprint between CBDC and other payment methods (cryptocurrency, cash, and card networks). As the legitimacy of CBDC is backed by the trust of central banks, CBDC does not need to prove its legitimacy through its technological structure. Therefore, CBDC does not require the energy-intensive consensus or mining mechanisms used by a cryptocurrency, so its energy consumption is lower (comparable to that of a credit card system). CBDC can be designed to use various systems, such as Real Time Gross Settlement (RTGS), Distributed Ledger Technology (DLT), or a mixture of both. Careful deliberation to meet the objectives and implications will be important as CBDC can be a catalyst for financial innovation.Publication A Novel Tobacco Market Diversification(World Bank, Washington, DC, 2022-04-27)In this working paper, an exploration of available data and information is conducted and findings presented, to support the view that the dichotomous business model and related harm reduction narrative promoted nowadays by the tobacco industry, merits scrutiny by the international community. The promotion of e-cigarettes as welfare enhancing in rich countries, particularly because they are posited to help adult smokers quit, tends to obfuscate a dire reality. The same tobacco industry that promotes (e-cigarettes as harm reduction in rich countries, derives the bulk of its profits by selling cigarettes in lower income countries.Publication Assessing Incentives to Increase Digital Payment Acceptance and Usage(World Bank, Washington, DC, 2022-01-18)An important step to achieve greater financial inclusion is to increase the acceptance and usage of digital payments. Although consumer adoption of digital payments has improved dramatically globally, the acceptance and usage of digital payments for micro, small, and medium-sized retailers (MSMRs) remain challenging. Using random forest estimation, The authors identify 14 key predictors out of 190 variables with the largest predictive power for MSMR adoption and usage of digital payments. Using conditional inference trees, they study the importance of sequencing and interactions of various factors such as public policy initiatives, technological advancements, and private sector incentives. The authors find that in countries with low point of sale (POS) terminal adoption, killer applications such as mobile phone payment apps increase the likelihood of P2B digital transactions. They also find the likelihood of digital P2B payments at MSMRs increases when MSMRs pay their employees and suppliers digitally. The level of ownership of basic financial accounts by consumers and the size of the shadow economy are also important predictors of greater adoption and usage of digital payments. Using causal forest estimation, they find a positive and economically significant marginal effect for merchant and consumer fiscal incentives on POS terminal adoption on average. When countries implement financial inclusion initiatives, POS terminal adoption increases significantly and MSMRs’ share of person-to-business (P2B) digital payments also increases. Merchant and consumer fiscal incentives also increase MSMRs’ share of P2B electronic payments.Publication Structured Lesson Plans for Literacy Instruction(World Bank, Washington, DC, 2022-03-31)Literacy is the cornerstone of education, and a driver of human economic, social, and civic wellbeing. Despite its importance, far too many children fail to become literate. The World Bank uses a measure called learning poverty to indicate when a child cannot read and understand an age-appropriate text by age ten. The best available data showed that more than two-thirds of children in low- and middle-income countries suffer learning poverty. The World Bank is committed to helping countries achieve the learning target: to cut learning poverty by at least half by 2030. Achieving better outcomes in literacy requires a comprehensive effort in many domains. One of the most important is ensuring that students and teachers have and use high-quality instructional materials, especially textbooks, for reading instruction. As countries and systems review their literacy teaching and learning materials, they will want to compare them to the materials from other countries and systems. The purpose of the compendium is to allow such reviews and comparisons by grouping a critical mass of structured pedagogy lesson plans and related materials in one place.Publication Sustainable Cities Towards A Green, Resilient and Inclusive Recovery(Washington, DC, 2022-03)Cities are key to unlocking a climate-smart future for all, as they account for more than 50 percent of the global population, about 70 percent of global energy-related CO2 emissions and 80 percent of global GDP. Urban centers’ share of emissions is expected to grow as the urban population is projected to increase by 2.3 billion people by 20502. As the world recovers from the COVID-19 crisis, cities will present a huge opportunity to rebuild in a way that is climate friendly and meets some of the world’s ambitious climate targets. Cities are viewed as the source of and the solution to many of today's economic, social, and environmental challenges. This is not only because of the concentration of population and economic assets in urban areas, but also because local authorities perform key functions that impact the quality of life of their residents. From an urban management perspective, the leading resource and knowledge sharing platform is the GEF funded Global Platform for Sustainable Cities (GPSC), hosted by the World Bank. The GPSC states that achieving sustainability requires the balanced accomplishment of outcomes against four pillars, namely (1) robust economic growth, prosperity, and competitiveness across all parts of the city; (2) protection and conservation of ecosystems and natural resources into perpetuity; (3) mitigation of greenhouse gas (GHG) emissions while fostering overall city resilience; and (4) inclusiveness and livability, mainly through the reduction of city poverty levels and inequality. The Urban Sustainability Framework (USF), developed to outline the areas of work and support by the GPSC, offers a very useful representation of both outcomes as well as enabling actions and requirements (such as spatial data and good governance) cities could focus on.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication New Technologies, New Risks? Innovation and Countering the Financing of Terrorism(World Bank, 2010)Recent developments in the way financial services are delivered have provided both opportunities for economic development and prompted fears of their attractiveness for crimes such as terrorist financing. This paper explores four innovations, value cards, mobile financial services, online banking and payments, and digital currencies, outlining how they work, analyzing their risks, and identifying some ways in which governments and providers are attempting to reduce their attractiveness to financiers of terrorism. Determining what the actual risks are is critical to ensuring that laws and regulations balance both the need to protect integrity in the market and to create an environment friendly to business and empowering to the poor. The paper concludes that these new methods of payment do not offer particular usefulness to terrorist financiers. However, some of these channels could be attractive for general criminal abuse because they have an ambiguous place in the legal regime. Providers therefore, may not know about or elect to properly mitigate risks. The industry is encouraged to work within itself to share information to prevent and detect criminal activity. Governments should consult with industry in deciding regulation and industry should notify government prior to rolling out a new service. This will make government oversight more effective. Lastly, since many of these services are international in scope, government coordination and awareness rising is central.Publication ICT Sector Policy Note for Panama : Enabling Inclusive Development through Information and Communications Technologies(2014-08-06)The Government of Panama and the private sector recognize the importance of information and communications technology (ICT) as an enabler of national development. This ICT sector policy note seeks to identify opportunities and challenges for growth of the ICT sector in Panama, particularly on rural access to broadband services and on cybersecurity, and potential for spillover impacts across other sectors. It provides a brief overview of the ICT sector in Panama and outlines a series of strategic actions and recommendations aimed at leveraging ICT as an engine of growth by targeting connectivity infrastructure, policies, regulation, e-Services, public data, and skills. The report is organized as follows: section one presents ICT sector in the economy. Section two deals with offer for connectivity. Section three presents demand. Section four describes the sector status from the cybersecurity point of view. Based on these analyses, section five identifies challenges that are hindering the growth of the industry, and section six presents policy options to overcome them. Finally, the World Bank describes the ways it can support those policy options in section seven and presents a set of joint activities in section eight.Publication IFC Mobile Money Study 2011(Washington, DC, 2011)Mobile money (m-money) refers to the use of mobile phones to perform financial and banking functions. However, the technology is far ahead of the infrastructure of financial and technical network service providers needed for an m-money system to function. This study was undertaken to increase the understanding of m-money and to address key issues in scaling up development of m-money services globally. It examines the potential demand for m-money, national regulatory environments, major obstacles, and the requirements of potential service providers and networks to run m-money services as viable businesses. Four countries - Brazil, Nigeria, Sri Lanka, and Thailand - each of which represents a different world region, socioeconomic situation, and financial sector context, were included in the study. The countries were analyzed in terms of m-money business models, money flows and demand, potential user perceptions and behavior, regulations, and agent networks. In each country, an m-money service provider acted as a partner institution. To place these four countries in the wider context of m-money developments, three case studies - Japan, Kenya, and the United States were also examined. The size of potential opportunities for m-money were quantified through demand estimates and compared with estimates in the three reference countries. Chapter one provides an introduction to the study's objectives and context, and explains the definition and positioning of m-money used in this report. Chapter two presents case studies of the prominent m-money countries Kenya and Japan, as well as the United States. Chapter three presents an overview of the four country study findings and analysis. Chapter four describes the m-money business models adopted in each country and the challenges that each country faces. Chapter five concludes by placing each country along an m-money demand curve and explains the impact of this placement on the development of an opportunity for m-money.Publication IFC Mobile Money Study 2011(Washington, DC, 2011)Although a number of m-money businesses have emerged around the world, few have reached significant scale. Overall, m-money uptake is limited when contrasted with its apparent promises of reaching the unbanked and underserved, of servicing existing banking clients, and of being a means for a cashless society. This study examines the following in more detail: existing major money flows and the critical mass of low-value, high-volume payment transactions and whether m-money can be used for them (i.e., potential demand); regulatory environment and major obstacles for m-money uptake; business models of partnering institutions; payment behavior of users and nonusers (banked and unbanked), in particular where they receive funds and how they use money, including alternative means; and existing and potential agents networks, their requirements to run m-money as a viable business, and their training needs. This report provides detailed information regarding the five main topics as they relate to Brazil, business models, money flows and demand, potential user perceptions and behavior, regulation, and agent networks.Publication Mobile Money Services Development : The Cases of the Republic of Korea and Uganda(World Bank, Washington, DC, 2014-02)This study intends to increase understanding of how different types of mobile money services have developed in different environments. For this purpose, two countries were selected, the Republic of Korea and Uganda. From these study cases, some conclusions emerge. The development of mobile banking services can appear at different stages of financial sector development, but it requires a vibrant and competitive telecommunications sector. The regulatory environment does not need to be very sophisticated for the mobile industry to emerge. However, some elements appear to be important. The legal framework should allow (or at least not explicitly forbid) nonbank financial institutions to issue money and use banking agents or correspondents. To ensure wider use of the service by the population, it is important to educate the population on the benefits of mobile money services.
Users also downloaded
Showing related downloaded files
Publication Income Mobility, Income Risk, and Welfare(Published by Oxford University Press on behalf of the World Bank, 2019-06)This paper presents a framework for the quantitative analysis of individual income dynamics, mobility, and welfare, with ex ante identical individuals facing a stochastic income process and market incompleteness, implying that they are unable to insure against persistent shocks to income. We show how the parameters of the income process can be estimated using repeated cross-sectional data with a short panel dimension and use a simple consumption-saving model for quantitative analysis of mobility and welfare. Our empirical application, using data on individual incomes from Mexico, provides striking results. Most of the measured income mobility is driven by measurement error or transitory income shocks and is therefore (almost) welfare neutral. Only a small part of measured income mobility is due to either welfare-reducing income risk or welfare-enhancing catching-up of low-income individuals with high-income individuals, both of which, nevertheless, have economically significant effects on social welfare. Strikingly, roughly half of the mobility that cannot be attributed to measurement error or transitory income shocks is driven by welfare-reducing persistent income shocks. Decomposing mobility into its fundamental components is thus crucial from the standpoint of welfare evaluation.Publication The Design and Sustainability of Renewable Energy Incentives : An Economic Analysis(Washington, DC: World Bank, 2015)Rapid urbanization and economic growth, new demographic trends, and climate change are key challenges that developing countries must face as they strive to meet growing energy demand. The main objectives of this study are to offer: (a) a global taxonomy of the economic and financial incentives provided by renewable support schemes and (b) an economic modeling of the sustainability and affordability of such support schemes. In an attempt to contribute to the lively debate, this study provides a global taxonomy of the economic and financial incentives provided by renewable energy (RE) support schemes. It summarizes economic models of the sustainability and affordability of such support schemes, alongside operational advice on how the regulatory design may need to be modified to minimize the impact on the budget and be affordable to the poor, as well as how to identify and fill the financing gap. This analytical framework: (a) differentiates and illustrates tradeoffs among local, regional, and national impacts, in the short and long run; (b) captures distributional impacts (since subsidies to cover the incremental costs of RE may have very different beneficiaries); and (c) captures externalities and compares (where possible) alternative projects based on equivalent output and cost (comparing, for example, RE and energy efficiency projects against those using fossil fuels). The report is organized as follows: chapter one gives introduction. Chapter two presents the analytical framework that underpins the case studies, and provides the background for the principal research hypothesis of this report, which is better attention to the principles of economic analysis and market efficiency leads to more sustainable and effective policies. Chapter s three to ten present country case studies for Vietnam, Indonesia, Sri Lanka, South Africa, Tanzania, Egypt, Brazil, and Turkey. The conclusions of the study are presented in chapter eleven.Publication World Development Report 2004(World Bank, 2003)Too often, services fail poor people in access, in quality, and in affordability. But the fact that there are striking examples where basic services such as water, sanitation, health, education, and electricity do work for poor people means that governments and citizens can do a better job of providing them. Learning from success and understanding the sources of failure, this year’s World Development Report, argues that services can be improved by putting poor people at the center of service provision. How? By enabling the poor to monitor and discipline service providers, by amplifying their voice in policymaking, and by strengthening the incentives for providers to serve the poor. Freedom from illness and freedom from illiteracy are two of the most important ways poor people can escape from poverty. To achieve these goals, economic growth and financial resources are of course necessary, but they are not enough. The World Development Report provides a practical framework for making the services that contribute to human development work for poor people. With this framework, citizens, governments, and donors can take action and accelerate progress toward the common objective of poverty reduction, as specified in the Millennium Development Goals.Publication Empowerment in Practice : From Analysis to Implementation(Washington, DC: World Bank, 2006)This book represents an effort to present an easily accessible framework to readers, especially those for whom empowerment remains a puzzling development concern, conceptually and in application. The book is divided into two parts. Part 1 explains how the empowerment framework can be used for understanding, measuring, monitoring, and operationalizing empowerment policy and practice. Part 2 presents summaries of each of the five country studies, using them to discuss how the empowerment framework can be applied in very different country and sector contexts and what lessons can be learned from these test cases. While this book can offer only a limited empirical basis for the positive association between empowerment and development outcomes, it does add to the body of work supporting the existence of such a relationship. Perhaps more importantly, it also provides a framework for future research to test the association and to prioritize practical interventions seeking to empower individuals and groups.Publication Natural Disasters, Poverty and Inequality(Taylor and Francis, 2021-10-28)Conventional risk assessments underestimate the human and macroeconomic costs of disasters, leading to inefficient risk management strategies. This happens because conventional assessments focus on asset losses, neglecting important relationships between vulnerability and development. When affected by a hazard, poor households take longer to recover from disasters and are more likely to face long-term consequences. Forced to manage trade-offs between essential consumption and reconstruction, these households are more likely to face persistent health or education costs. This chapter proposes a review of existing research into the natural disaster-poverty-inequality nexus and the various metrics that can be used to measure disaster impacts, such as recovery times, economic (income or consumption) losses, poverty incidence, inequality, and welfare or well-being losses. Each of these metrics provides a different perspective on disaster costs and suggest different spatial and sectoral priorities for action. Focusing on the concepts of well-being losses and socioeconomic resilience, this chapter shows how more comprehensive accounting of disaster impacts can better inform disaster risk management and climate change adaptation strategies and support their integration into development and poverty-reduction policies.