World Summit on Information Society
Geneva, 29 April 2015
How We Can Protect Customers’ Funds
in Mobile Money Systems
Jonathan Greenacre (Oxford University)
Professor Ross Buckley (UNSW)
Dr David Ramos Muñoz (Universidad Carlos III de Madrid)
Javier Solana (Oxford University)
Outline of Presentation
1. The issue: risks to customers’ funds and
mechanisms to reduce them
2. Common law countries: we can use trusts to
provide these mechanisms (theory and practice)
3. Civil law countries: we need to use other
legal instruments to provide these mechanisms
(theory)
4: Additional resources
5. Discussion of regulators’ challenges when
protecting customers’ funds
2
1. Risks to customers’ funds and
mechanisms to reduce them
Customer
3
1. Risks to customers’ funds and
mechanisms to reduce them
Regular money
Customer
Provider
E-Money
4
1. Risks to customers’ funds and
mechanisms to reduce them
Risk and Mechanism
Regular money
Customer
Provider
E-Money
5
1. Risks to customers’ funds and
mechanisms to reduce them
Risk and Mechanism
Insolvency risk
(eg pay
creditors)
Fund
isolation
Regular money
Customer
Provider
E-Money
6
1. Risks to customers’ funds and
mechanisms to reduce them
Risk and Mechanism
Insolvency risk
(eg pay
creditors)
Fund
isolation
Liquidity risk
(eg Provider
builds a
phone tower)
Fund
safeguarding
Regular money
Customer
Provider
E-Money
7
1. Risks to customers’ funds and
mechanisms to reduce them
Risk and Mechanism
Insolvency risk
(eg pay
creditors)
Fund
isolation
Liquidity risk
(eg Provider
builds a
phone tower)
Fund
safeguarding
Operational
risk
(eg employee
theft)
Auditing and
monitoring
Regular money
Customer
Provider
E-Money
8
2. Common law countries: we can use
trusts (theory and practice)
Risk and Mechanism
Insolvency risk
(eg pay
creditors)
Fund
isolation
Liquidity risk
(eg Provider
builds a
phone tower)
Fund
safeguarding
Operational
risk
(eg employee
theft)
Auditing and
monitoring
Common law
countries
Regular money
Customer
Provider
E-Money
9
2. Common law countries: we can use
trusts (theory and practice)
Risk and Mechanism
Insolvency risk
(eg pay
creditors)
Fund
isolation
Liquidity risk
(eg Provider
builds a
phone tower)
Fund
safeguarding
Operational
risk
(eg employee
theft)
Auditing and
monitoring
Common law
countries
Establish a trust
Regular money
Customer
Provider
E-Money
10
2. Common law countries: we can use
trusts (theory and practice)
Risk and Mechanism
Insolvency risk
(eg pay
creditors)
Fund
isolation
Liquidity risk
(eg Provider
builds a
phone tower)
Fund
safeguarding
Operational
risk
(eg employee
theft)
Auditing and
monitoring
Common law
countries
Establish a trust
Regular money
Customer
Provider
E-Money
Trust deed operates
as a ‘rule book’
11
2. Common law countries: we can use
trusts (theory and practice)
Risk and Mechanism
Common law
countries
Insolvency risk
(eg pay
creditors)
Fund
isolation
Liquidity risk
(eg Provider
builds a
phone tower)
Fund
safeguarding
Trust deed operates
as a ‘rule book’
Operational
risk
(eg employee
theft)
Auditing and
monitoring
An ‘active
regulator’
Establish a trust
Regular money
Customer
Provider
E-Money
12
3. Civil law law countries: we need to
use other mechanisms (theory)
Risk and Mechanism
Insolvency risk
(eg pay
creditors)
Fund
isolation
Liquidity risk
(eg Provider
builds a
phone tower)
Fund
safeguarding
Operational
risk
(eg employee
theft)
Auditing and
monitoring
Regular money
Customer
Provider
E-Money
13
3. Civil law law countries: we need to
use other mechanisms (theory)
Risk and Mechanism
Insolvency risk
(eg pay
creditors)
Fund
isolation
Liquidity risk
(eg Provider
builds a
phone tower)
Fund
safeguarding
Operational
risk
(eg employee
theft)
Auditing and
monitoring
Civil law countries
Regular money
Customer
Provider
E-Money
14
3. Civil law law countries: we need to
use other mechanisms (theory)
Risk and Mechanism
Insolvency risk
(eg pay
creditors)
Fund
isolation
Liquidity risk
(eg Provider
builds a
phone tower)
Fund
safeguarding
Operational
risk
(eg employee
theft)
Auditing and
monitoring
Civil law countries
Fiducia
Regular money
Customer
Provider
E-Money
15
3. Civil law law countries: we need to
use other mechanisms (theory)
Risk and Mechanism
Insolvency risk
(eg pay
creditors)
Fund
isolation
Liquidity risk
(eg Provider
builds a
phone tower)
Fund
safeguarding
Operational
risk
(eg employee
theft)
Auditing and
monitoring
Civil law countries
Fiducia
Regular money
Customer
Provider
E-Money
Mandate contract
16
3. Civil law law countries: we need to
use other mechanisms (theory)
Risk and Mechanism
Civil law countries
Insolvency risk
(eg pay
creditors)
Fund
isolation
Liquidity risk
(eg Provider
builds a
phone tower)
Fund
safeguarding
Mandate contract
Operational
risk
(eg employee
theft)
Auditing and
monitoring
Direct regulation
(legislation,
insurance)
Fiducia
Regular money
Customer
Provider
E-Money
17
4. Additional Resources
Protecting Customers’ Funds
Michael Tarazi and Paul Breloff, Nonbank E-Money Issuers:
Regulatory Approaches to Protecting Consumer Funds (CGAP,
2010)
Kate Lauer and Michael Tarazi, Supervising Nonbank Mobile
Money Issuers (CGAP, 2012)
Common law countries
Jonathan Greenacre and Ross Buckley, ‘Using Trusts to Protect
Mobile Money Customers’ (Singapore Journal of legal Studies,
2014)
Jonathan Greenacre and Ross Buckley, Trust Law Protections
for E-Money (PFIP/AFI, 2013)
Civil law countries
David Ramos, Javier Solana, Jonathan Greenacre, Ross
Buckley, The Regulation of Mobile-Money in Civil Law
Jurisdictions: Protection of Customers’ Funds (currently being
drafted)
18
5. Discussion: Challenges regulators
face when trying to protect customers’
funds
Jonathan Greenacre
[email protected]
Ross Buckley
[email protected]
David Munoz
[email protected]
Javier Solana
[email protected]
19