Agent Regulation
Allowing EMIs and other DFS providers to offer services through agents can incentivize them to target low-income and remote customers. Regulators are seeking to strike a balance that will enable providers to offer low-cost services through agents without negatively affecting service delivery or consumer protection.
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Read MoreExclusivity
Should agent exclusivity be permitted?
Exclusivity
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Read MorePermitted Services
Which services may be outsourced to agents?
Permitted Services
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Read MoreAuthorization
What notification/authorization requirements exist for appointing agents?
Authorization
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Read MoreIncentives
What type of policies can promote the expansion of agent networks?
Incentives
Agent Supervision
As e-money grows, so does the need to assess the risk presented by use of agents to deliver e-money services.
Examples of agent-related risks include the following:
| Consumer | Operational | ML/TF |
|---|---|---|
| Fraud | IT system failure | ML/TF by agent |
| Unauthorized fees | Service outage | ML/TF by customer |
| Lack of receipts | Contingency planning | |
| Lack of disclosure/transparency | Internal controls | |
| Inadequate dispute resolution mechanisms | ||
| Insufficient liquidity |
AML/CFT Training for Agents
The use of agents may create certain AML/CFT risks, such as failure to implement risk mitigants or facilitation of fraudulent activities.
Overview
While critical to the success of e-money, the use of agents creates certain AML/CFT risks, including the following:
- Poorly trained agents may be unaware of AML/CFT good practices and may fail to detect and report suspicious activity.
- Poorly vetted agents may collude with others to facilitate transfer of proceeds of crime.
- They may also facilitate the establishment of fake/ fraudulent accounts (knowingly or unknowingly).
Country Examples
The Financial Action Task Force (FATF) considers agents an extension of the regulated entity, so customer due diligence (CDD) is treated as if conducted by the principal EMI.
The Central Bank of the Philippines initially required all new e-money agents to attend a one-day AML/CFT training, which was not widely available outside of Manila. As this was considered a significant barrier to agent registration, the Central Bank now allows e-money issuers to train their agents directly.
The Central Bank of Nigeria requires EMIs to train their agents on AML/CFT requirements. EMIs must share agent AML/CFT policies with the central bank, which also reserves the right to directly inspect agents.
Considerations
Some of the way that regulators can help to ensure that EMIs properly train their agents with respect to AML/CFT include the following:
- Holding the EMI responsible for the actions of its agents on its behalf, including with respect to AML/CFT compliance;
- Requiring EMIs to share AML/CFT policies related to agency business with the regulator before engaging agents; and
- Reserving the right to directly inspect agents and to examine records or data held by agents, and examining their compliance and effectiveness during the inspections, as necessary.
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Related Resources
