Uganda Law Commission cautions on mobile money regulation
As Uganda moves to regulate mobile money and e-banking to stem money-laundering and other related crime, caution must be taken not to breach customer privacy that may affect confidence and trust in the subsector currently experiencing hyper growth.
The caution is contained in an issue paper by the Uganda Law Reform Commission (ULRC) to stakeholders in an on-going consultation that will eventually lead to legislation that will govern the mobile money and e-banking sub sector.
ULRC warns that any breach of confidence and trust is likely to turn around the gains that have brought on board thousands of hitherto unbanked populations in the country-side.
The Uganda Law Society is this month studying the paper to provide proposals to the ULRC for inclusion into a draft law.
“For a country overwhelmed by limited banking options, mobile has in just a short time brought millions to the ranks of financial inclusion. As part of the global efforts to counter money laundering and terrorism, FATF (Financial Action Task Force) requirements demand transparency of all financial services customers, including mobile money... Should mobile money platforms come to be affected by privacy breaches and malware, users will lose trust in the application, reversing adoption trends and eliminating potential gains,” the commission noted.
Currently, there is no specific law to deal with the mobile money and e-banking apart from Bank of Uganda (BoU) regulations issued last October.
The guidelines that emphasise consumer safety require mobile money service providers to partner with BoU-registered banking institutions, in which the institution would be required to distribute the money held in an escrow account in case of adverse eventualities.
But the commission says the guidelines “do not have a legal force of an Act of Parliament” and are only an “interim measure.”
users being fleeced Last year, police revealed that at least one hundred mobile money users were being fleeced of millions of shillings every week although many of them opted not report owing to little amounts involved and the tedious/futile process of recovery.