PRACTICE NOTE
FOR
MOBILE MONEY TRANSFER OPERATORS
ISSUED 17 FEBRUARY 2015
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Nature of establishment
The Central Bank of Swaziland (CBS) is a creature of statute in terms of the
Central Bank of Swaziland Order 1974 (as amended). In terms of the Act, the
objects of the CBS are to inter alia to promote, regulate and supervise the
efficient and secure operation of payment systems with the prime aim of
promoting a sound financial structure.
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TABLE OF CONTENTS
Chapter I: General Provisions ...................................................... 6
Purpose ............................................................................. 6
Definitions ......................................................................... 6
Chapter II: Licensing Procedure ................................................. 10
Licensing ......................................................................... 10
Application for a license ....................................................... 10
Other Documentation .......................................................... 13
Requirement for supervised institutions by the Central Bank ............ 13
Capital Requirements .......................................................... 13
Letter of Acknowledgement ................................................... 14
Central Bank’s Decision on granting license ................................ 14
Authorization or License fees ................................................. 15
Examinations .................................................................... 16
Regulatory Fees ................................................................. 17
Withdrawal or suspension of authorization or license ..................... 17
Discontinuing payment service(s) ............................................ 18
Action of the Central Bank .................................................... 18
Return of the License .......................................................... 18
Merger ............................................................................ 19
Chapter III - Miscellaneous Provision ............................................ 20
Outsourcing of activities .................................................... 20
Agency agreements .......................................................... 21
Requirements for specific services ........................................ 23
Prohibition of exclusivity agreement ...................................... 23
Reports and Records ......................................................... 23
Existing Providers ............................................................ 24
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Sanctions ...................................................................... 25
Chapter IV: Final Provision........................................................ 26
Entry into force ............................................................... 26
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PREFACE
This guide shall be cited as the Central Bank of Swaziland (CBS) Mobile
Money Transfer (MMT) Practice Note No. 1/2015/NPS and shall be applicable
to financial institutions and non-financial institutions as defined by the
Financial Institutions Act, 2005 and is effective from the 17th February
2015. This Practice Note provides minimum requirements to operate MMT
systems within and/or from Swaziland after due authorization processes.
This Practice Note mainly outlines authorization and/or the licensing
procedures to aid application and consideration thereof regarding national
provision of MMT services. Whereas adoption of international best practice
should facilitate a consistent approach to risk management, MMT providers
shall be expected to have an integrated approach to managing risk that
adequately identifies, measures, monitors and controls risk.
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Chapter I: General Provisions
1.
Purpose
The Practice Note sets forth the rules governing the authorization or
licensing by the Central Bank of Swaziland, of Mobile Money Payment
Service Providers and monitoring of their activities.
2.
Definitions
Terms and expressions used in this Practice Note have the following
meaning:
2.1
Agency means a contract whereby one (1) person is authorized
and usually required by another (the principal) to contract or to
negotiate a contract on the latter’s behalf with a third person.
2.2
Agency Agreement means a legal contract creating a fiduciary
relationship whereby the “the principal” agrees that the “agent”
acts for and on behalf of him or her.
2.3
Branchless banking means a distribution channel strategy used
for delivering financial services without relying on bank branches.
It entails substantially the use of technology means, such as
electronic, digital or similar device, either remotely or through
the use of third-parties outlets to offer at least basic cash deposit
and withdrawal in addition to transactional or payment services;
backing of a commercial bank; and customers can use these
banking services on regular basis;
2.4
“Supervised Institutions” means a bank, a non-bank financial
institution or a micro-finance institution within the meaning of the
laws governing the financial sector
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2.5
Issuer of Payment Instruments means any entity which
provides payment instruments to users for the purpose of making
payments;
2.6
“Mobile Money” also referred to as “mobile payment” or
“mobile money transfer”, mobile wallet generally refer to
payment services operated under financial regulation and
performed from or via a mobile device as opposed to cash, paper
based instruments and card based payments.
2.7
“Money Remittance” means a payment service where funds
are received from an originator without any accounts being
created in the name of the originator or the beneficiary, for the
sole purpose of transferring a corresponding amount to a
beneficiary or to another payment services provider acting on
behalf of the beneficiary.
2.8
“Payment Services” The following activities are payment
services:
2.8.1 Services enabling
cash
to
be
placed on
and/or
withdrawn from a payment account in Supervised
Institutions as well as all the operations required for
operating a payment account.
2.8.2 Execution of payment transactions, including transfers
of funds on a payment account in the Supervised
Institutions with the user’s payment service provider or
with another payment service provider.
2.8.3 Execution of payment transactions on a payment
account in the Supervised Institutions where the funds
are covered by a credit line for payment service user;
2.8.4 Issuing and/or acquiring of payment instruments;
2.8.5 Money remittance;
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2.8.6 Execution of payment transactions where the consent
of the payer to execute a payment transaction is given by
means of any telecommunication, digital or IT device and the
payment is made to telecommunication, IT intermediary
between the payment service user and the supplier of the
goods and services.
3. “Payment account” – means an account held in the name of one or
more payment service users which is used for the execution of payment
transactions.
4. “Payment Services Provider” means any entity providing services
enabling cash
deposits and
withdrawals,
execution
of Payment
Transaction, issuing and or acquisition of payment instruments, money
remittances and any other services functional to of money. The term
does not include solely those who provide online services or by
telecommunication services or network access;
5. “Payment instruments” means an instrument enabling the holder/user
to transfer funds such as cheques, electronic money, credit cards and
debit cards or any other instrument through which persons can make
payments, with the exception of banknotes and coins are payment
instruments;
6. “Payment Transaction” means a transfer of funds between, or into or
from accounts. A payment transaction may be either a credit or a debit
transfer. It is initiated by means of a payment order, which may be
written, electronic, digital or any other communication device, or by the
use of a payment instrument.
7. “Stored value devices” are devices with data encoded in either a
magnetic strip or a computer chip that are preloaded with a fixed
amount of electronic currency or value. This can be redeemed or
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transferred to individuals and/or merchants in a manner that is similar to
spending physical currency;
8. “Trust Account” means a separate bank account segregated from a
payment service provider’s own funds, in which the payment service
provider is required to deposit all funds collected for clients.
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CHAPTER II: LICENSING PROCEDURE
3.
Licensing
No person or entity may act as a Mobile Money Payment Services Provider,
unless they are in possession of a no objection letter or authorization or
license for this purpose, obtained from the Central Bank.
Supervised Financial Institutions providing payment services under the
Financial Institutions Act are exempted from the requirement to obtain a
license from the Central Bank under this guideline. However they are
subject to any relevant monitoring requirements imposed by the Central
Bank.
4.
Application for a license
In order to obtain a letter of no objection or authorization or license, an
institution not supervised by the Central Bank will submit to the Central
Bank an application letter accompanied by at least the following
documentation:
4.1
Description of the nature and scope of the services to be
offered and how these services fit in with its overall business
strategy;
4.2
List of products and services to be provided with a breakdown
of commissions/prices to be charged to the customer and/or
consumer;
4.3
Description of governance structure of the scheme to provide
the service, including legal definition of relationship with any
supervised financial institution from which it clearly emerges how
liabilities are shared and risks avoided or reduced;
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4.5
Criteria for the selection of agents and/or the outsourcing of
parts of the activities, where applicable;
4.6
Copy of any agency or outsourcing agreement, as appropriate,
either individual or standard;
4.7
A signed document detailing the features and operational
modalities of all IT interfaces including the operating systems and
software explaining at a minimum the following:
4.7.1 A description including diagrams of the configuration of
the institutions electronic payment system and its capabilities
showing:
4.7.2 How the electronic payment system is linked to other
host systems or the network infrastructure in the institution;
4.7.3 How transaction and data flow through the network,
settlement process and timing;
4.7.4 What types of telecommunication channels and remote
access capabilities exist such as direct modem dial-in, internet
access, etc; and
4.7.5 What security controls/measures are installed
4.7.6 A list of software and hardware components indicating
the purpose of the software and hardware in the electronic
payment infrastructure
4.7.7 How the system is interoperable with other existing
electronic payment systems;
4.8
A signed document of the relevant portion(s) of the security
policies and procedures manual containing at a minimum:
4.8.1 A description of the institutions security organization;
4.8.2 Definition of responsibilities for designing, implementing,
monitoring and updating information security measures; and
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4.8.3 Established procedures for evaluating policy compliance,
enforcing
disciplinary
measures
and
reporting
security
violations;
4.9
A signed document describing the contingency and disaster
recovery plans for electronic payment facilities and event
scenario/problem
management
plan/program
to
resolve
or
address problems, such as complaints, errors and intrusions and
the availability of back up facilities;
4.10 Proof of ability to comply with all applicable Anti Money
laundering and combating of financing of Terrorism (AML/CFT)
laws as enshrined in the Money Laundering/Terrorist Financing
(Prevention) Act, 2011 and Suppression of Terrorism Act, 2009,
standards and measures. An applicant should submit a Policies and
Procedures manual outlining its proposed internal rules and
systems for compliance with AML legislation;
4.11 Details of the customer protection measures, including
consumer recourse mechanisms and consumer awareness program;
4.12 Details of data protection policy
4.13 Float management guidelines and measures;
4.14 Evidence that the regulator for the Telecommunications
industry certified the technology infrastructure for payment
service provider operating their own network.
4.15 The institution shall produce such other documents that the
Central Bank may call for during the consideration of the
application.
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5.
Other Documentation
An institution not supervised by the Central Bank wishing to provide
payment services shall further submit to the Central Bank for consideration
to obtain a letter of no objection or authorization:
5.1
A trading license to operate in the home/base country, where
applicable;
5.2
Certificate of business registration in Swaziland
5.3
Proof of existence of Trust Account with a
licensed
commercial bank in Swaziland, set up such that the account is not
accessible to the institution for its non-payment services
operations;
5.4
Evidence that the applicant holds initial capital as mentioned
under this guideline;
5.5
The identity and qualifications of directors
6.
Requirement for supervised institutions by the Central Bank
Any institution supervised by the Central Bank wishing to provide new or
additional payment services must provide to the Central Bank for approval,
a detailed description of the payment services it intends to operate, at least
thirty (30) working days before effecting operations, containing all
documents listed in article 4.
7.
Capital Requirements
Where applicable, capital requirements for institutions supervised by the
Central Bank shall be those established in terms of Section 20 of the
Financial Institutions Act, 2005.
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8.
Letter of Acknowledgement
8.1
Upon receipt of an application letter together with the
requisite license or authorization fee prescribed by the Central Bank
under article 10 of this guideline and supporting documents in
accordance with articles 4 and 5, the Central Bank shall, within seven
(7)
working
days,
send
the
applicant
a
formal
letter
of
acknowledgement or letter of deficiency as the case may be.
8.2
A letter of acknowledgement shall constitute official notice
that the documents submitted were received and that the processing
or evaluation may commence thereof unless the submissions are
found deficient.
8.3
A letter of deficiency shall outline deficiencies in the
application; provide a deadline for rectification of the deficiencies.
No further action shall be taken by the Central Bank unless the
deficiencies are rectified within the period prescribed.
9.
Central Bank’s Decision on granting license and/or authorization
9.1
The Central Bank shall, within three (3) months after receipt
of a complete application, investigate; prepare a response to the
applicant;
9.2
The response shall indicate whether the application satisfies
all requirements as provided by law and/or regulation, as well as
whether the granting of the letter of no objection or authorization or
license could be subject to the fulfillment of certain conditions that
the Central Bank may deem necessary.
9.3
The investigation may require direct contacts and clarifications
by the applicant, to be provided either in writing or verbally. In this
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instance the Central Bank shall draft minutes of the meeting to be
signed by the applicant.
9.4
The Central Bank shall inform the applicant, in writing, of its
decision to grant or refusal to grant the letter of no objection or
authorization or license. A notice communicating the refusal to grant
a letter of no objection or authorization or license shall indicate the
reasons for such refusal.
9.5
The granting of a letter of no objection or authorization or
license to an applicant not being an Institution supervised by the
Central Bank shall be conditional upon submission of an insurance
policy in the sum to be prescribed by a licensing authority as security
for the funds channeled through the system.
9.6
Any license or authorization shall be subject to annual renewal
under request of the Payment Services Provider.
10.
Authorization or License fees
10.1 A non-refundable license or authorization fee shall become due
and payable when applying for a license and upon subsequent
renewal of authorization.
10.2 For Institutions not supervised by the Central Bank desirous to
offer mobile payment services, the license fee shall be determined by
the licensing authority.
10.3 For Institutions not supervised by the Central Bank wishing to
offer any other payment service, the license fee shall be determined
by the designated licensing authority.
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11.
Examinations
11.1. The Central Bank shall cause regular on-site and off-site
examinations of the operations and affairs of every payment service
provider.
11.2. The purpose of an examination under subsection (1) shall be to
determine whether:
a)
the payment service provider concerned is in a sound
financial condition,
b)
the provisions of this Practice Note are being adhered to
by the payment service provider. And
c)
the business of a payment service provider is being
operated in a lawful and prudent manner
11.3. Every payment service provider and every agent of such an
institution shall, pursuant to an examination conducted under this
regulation, produce for the inspection of any examiner duly
authorized by the Central Bank, at such times and in such places as
the examiner may specify (being
times and places which in the
opinion of the examiner, are not detrimental to the conduct of the
normal daily business of such institution), all books, minutes,
accounts, cash securities documents and vouchers in its possession or
custody, relating to the business and shall supply all information
concerning the business as may reasonably be required by such
examiner within such time as the examiner may specify.
11.4. As soon as possible after the conclusion of an examination, the
Central Bank shall forward a summary of the examiner’s report
containing its salient points to the head office of the payment service
provider concerned.
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12.
Regulatory Fees
An annual regulatory fee for mobile money transfer service providers and for
other relevant service providers shall be determined by the licensing
authority.
13.
Withdrawal or Suspension of Authorization or License
13.1 The Central Bank may decide to withdraw or suspend the
authorization or license granted to a Payment Service Provider at any
time if:
13.1.1
The
Payment
Service
Provider
has
not
commenced operations within 12 months of the date on which
the license was granted to it;
13.1.2
The
Payment
Service
Provider
has
ceased
providing the service for a period of more than one month.
13.1.3
The Payment Service Provider has obtained the
license of the Central Bank through incorrect statements or
any other irregular means;
13.1.4
The conditions or requirements described in these
Practice Note are not met;
13.1.5
In case the operations of Payment Service
Provider endanger the stability of the financial system of
Swaziland;
13.1.6
The Payment Service Provider or a subsidiary of
Payment Service Provider is insolvent without possibility of
recovery;
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13.1.7
The
foreign
Payment
Service
Provider
is
undergoing liquidation in its country of origin.
13.1.8
If in the opinion of the Central Bank, the service
is no longer in the public interest or the service no longer
represents the interest of the participants.
13.2 The Central Bank shall immediately after its decision on the
withdrawal or suspension of the authorization or license, notify its
decision to the Payment Service Provider.
13.3 The Central Bank shall, immediately after the withdrawal or
suspension of the license, publish a public notice in such manner as it
deems appropriate.
14.
Discontinuing Payment Service(s)
In the case where any service provider wishes to discontinue providing
payment service or discontinue carrying on its business, such service
provider shall notify in writing together with the report regarding the
discontinuation of providing service or discontinuation of carrying on the
business to the Central Bank of Swaziland sixty days before it discontinues
the payment service(s).
15.
Action of the Central Bank
Upon receipt of the notification from the service provider as cited in article
13 of this Practice Note, the Central Bank of Swaziland shall have power to
order the service provider to make specific performance as directed prior to
discontinuation of providing service(s) or discontinue carrying on its business.
16.
Return of the License
Any service provider wishing to discontinue providing service or discontinue
carrying on its business shall surrender its license where applicable to the
Central Bank of Swaziland.
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17.
Merger
In the case where the service provider wishes to merge with the other
payment service providers, the provision of article 14, 15 and 16 shall be
applied mutatis mutandis.
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Chapter III - Miscellaneous Provision
18.
Outsourcing of activities
18.1 Parties are free to outsource parts of their payment services
activities, provided that this does not result in an increase in risk and
a reduction in protection of customers.
18.2 Any outsourcing agreement shall be in writing and comprise at
a minimum the following elements:
18.2.1
Definition
of
the
rights,
responsibilities
and
apportioning of liabilities between parties, stating how the
parties plan to manage the issue of any expected risk;
18.2.2 Accurate definition of the activities to be outsourced;
18.2.3
Mechanisms to ensure that the outsourced activities
are subject to monitoring mechanisms by the institution and
that regulatory review is permitted in order to grant to the
Central Bank inspecting officers full and timely access to
internal systems, documents, reports, and records
18.2.4 Specify that the third party must ensure safe-keeping
of all relevant records, data and documents/files for at least
five (5) years; or alternately, such record is shifted to the
institution at regular pre-specified intervals which will then
ensure safe keeping of this record for at least five (5) years or
longer if requested by CBS, FIU and Law Enforcement Agents.
18.2.5
State that all information/data that the third party
collects in relation to payment services, whether from the
customers or the institution or from other sources, is the
property of the institution, and the institution will be provided
with copies of related working papers/files it deems necessary,
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and any information pertaining to the institution must be kept
confidential.
18.2.6 Establish a protocol for changing the terms of the
service contract and stipulations for default and termination of
the contract; and
18.2.7 State that staff of the third party is not considered
staff of the institution.
18.3 Institutions Supervised by the Central Bank providing banking
services may decide to outsource banking activities or use agents, in
particular for the provision of branchless banking. In that case, the
Institution Supervised by the Central Bank must communicate such
intention to the Central Bank under the terms and conditions set
forth in Article 6 of this Practice Note and will be permitted to
operate only following approval of the Central Bank.
19.
Agency agreements
19.1 Payment Services Providers and third-parties in charge of parts
of the payment activities by way of outsourcing can use agents,
provided that the customers are always fully aware of the existing
agency relationship, of whether this depends from the Payment
Services Provider or the relevant Third Party, and of consequences
resulting from the use of agency networks.
19.2 Any agency agreement shall be in writing and provide at a
minimum the following elements:
19.2.1 Definition of the rights expectations, responsibilities
and apportioning of liabilities between parties, stating how the
parties plan to manage the issue of agent liquidity, and how
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the institution plans to handle the uncovered liability of its
agents;
19.2.2 Indication of the work to be performed by the agent
and the sharing of fees/revenues between the institution and
the agent;
19.2.3 Mechanisms to ensure that the activities performed by
the institution and that regulatory review is permitted in order
to grant to the Central Bank inspecting officers full and timely
access to internal systems, documents, reports, and records;
19.2.4 State that the agent will not perform management
functions, make management decisions, or act or appear to act
in a capacity equivalent to that of a member of management
or an employee of the institution;
19.2.5 Specify that the agent must ensure safe-keeping of all
relevant records, data and documents/files for at least five (5)
years; or alternately, such record is shifted to the institution
at regular pre-specified intervals which will then ensure safekeeping of this record for at least five (5) years.
19.2.6 State that all information/data that the agent collects
in relation to payment services, whether from the customers
or the institution or from other sources, is the property of the
institution and the institution will be provided with copies of
related working papers/files it deems necessary, and any
information pertaining to the institution must be kept
confidential;
19.2.7 Establish a protocol for changing the terms of the
service contract and stipulations for default and termination of
the contract;
19.2.8 State that staff of the agent are not considered staff of
the institution; and
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19.2.9 Clarify that the Payment Service Provider (licensed
institution) is ultimately liable to the clients.
20.
Requirements for specific services
20.1 For domestic Money Remittances the maximum amount to be
transferred per day and in total for each month shall be fixed by the
licensing
authority.
For
international
Money
Remittances
the
maximum amount to be transferred from Swaziland shall also be
determined by the licensing authority, that is, for each day, for each
month and for each year.
21.
Prohibition of exclusivity agreement
Contracts with exclusivity are not permitted by this Practice Note unless
specifically authorized, in writing, by the Central Bank.
22.
Reports and Records
22.1 Payment Service Providers are required to submit to the
Central Bank on a monthly basis, within 10 working days of the end of
each calendar month, a report of their transactions in terms of values
and volumes, number of account subscribers or account holders,
number of agents, material service interruptions and security
breaches and any other information as may be required by the
Central Bank from time to time.
22.2
Payment service providers are further required to report,
within 48 hours, to the Financial Intelligence Unit about suspicious
transactions in terms of the provisions of Anti-Money Laundering and
Financing Terrorism Prevention Act 2011.
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22.3 When a payment services provider intends to provide payment
services through an agent it shall communicate to the Central Bank
the name and address of the agent.
22.4 The service provider shall be expected to keep records showing
the identity of directors and persons responsible for the management
of the agencies.
22.5 The Central Bank may decide to list the agents into a registry
in its website.
However, if after taking action to verify the
information, the Central Bank is not satisfied that the information
provided is accurate, it shall refuse to list the agent in the above
registry.
22.6 Any changes or enhancements that shall expand the scope or
change the nature of payment services as originally provided shall be
reported to the Central Bank and subject to prior approval of the
Central Bank. These include but are not limited to:
22.6.1
Additional
capabilities
of
the
branchless
instrument, like access to new channels
22.6.2
Change in technology of service providers and
other major partners in the business;
22.6.3
Other changes or enhancements (such as changes
in commissions/prices structure or selection criteria for agents,
etc).
23.
Existing Providers
Licensed non supervised Financial Institutions already authorized to provide
payment at the time of the entry into force of this Practice Note, will be
required to comply with the requirements contained herein within six (6)
months of its entry into force failing which the license and/or authorization
will be suspended or withdrawn.
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24.
Sanctions
24.1 Any entity engaging in payment services without the proper
authorization of the Central Bank will be sanctioned in terms Section
16 of the National Clearing and Settlement System Act 2011 and shall
be required to cease any relevant activities.
24.2 Any payment service provider that violates the provisions of
Article 20 of this Practice Note shall be liable to pay a fine of 1/3 of
transferred amount in favour of the Central Bank.
24.3 Any Payment service Provider that violates the provisions
under Article 22 of this Practice Note shall be liable to pay a fine as
stipulated in the Central Bank regulation(s) regarding penalties.
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Chapter IV: Final Provision
25.
Entry into force
This Practice Note shall take effect on the day of its publication in the
Central Bank of Swaziland’s website.
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