Ugandan Central Bank Governor Wants Mobile Money Business Regulated

The Governor of the Central Bank of Uganda, Tumusiime Mutebile, has conceded that there is need for a law to streamline the Bank's supervisory role over mobile money services operated by telecommunication service providers.

Currently, mobile money operations -- an e-money financial service which has 18 million registered users in Uganda -- has no clear law regulating it and the BoU relies on its 2013 regulations about the business to keep tabs on it.

However, these regulations, according to the BoU's Executive Director of Supervision, Justine Bagyenda, have no legal effect and the Central Bank recently wrote to the Solicitor-General, seeking legal opinion over the matter.

"I definitely agree that there is need for a law to strengthen supervision in this area. I perfectly agree with you on this issue because you have raised pertinent concerns," Mutebile said here Wednesday during a meeting with members of the Parliamentary Committee on Information Communication Technology (ICT).

The Secretary of mobile phone operator MTN Corporation, Anthony Katamba, welcomed Mutebile's suggestion. "All financial and quasi-financial services in Uganda are regulated by the BoU. If the Governor says there is need for a law to properly regulate the sector, we cannot say otherwise," Katamba added.

According to BoU data covering the last quarter of 2014, mobile money transactions had a monthly total value of 2.1 trillion shillings (about US$730 million).

Bagyenda had earlier told the MPs that since money transmission is a regulated business under the Financial Institutions Act, the Central Bank monitors mobile money operators through issuance of clearance.

"Mobile money operators have partnerships with licensed financial institutions. It is these financial institutions that apply for clearance from BoU after carrying out due diligence on mobile money operators," Bagyenda said.

"Believe me, the risks in this business are there but they are minimal," said Bagyenda, who added that the BoU did not directly supervise mobile money operators.

MPs Vicente Bagiire, James Kabajo, Mariam Nalubega and Barnabas Tinkasiimire contended that the absence of a clear law regulating the industry leaves it prone to abuse.

Bagiire pointed out that BoU's inability to track suspicious transactions on individual accounts of registered mobile money customers leaves the system prone to abuse by money launderers or terrorists.

The lawmakers also noted that absence of a law providing for regulation by BoU has seen mobile money operators get away with questionable conduct like failing to instantly deposit money to beneficiaries or retaining money that remains unclaimed for.

"In Kenya, the law has provided a trust fund where this kind of money can be deposited instead of operators unfairly retaining money that does not belong to them. This can be done here," Bagiire said.

-- BERNAMA-NNN-NEW VISION