How Does Forex Mobile Trading Regulation Work In Africa

Mobile banking and mobile money services have witnessed growth throughout Africa as a result of the convergence of mobile phones, fast internet connections, and the continent's unbanked population. Financial services have become more efficient and inclusive as a result of this. Using a mobile phone to conduct financial activities has become commonplace, with the number of individuals doing so increasing every day. African countries like Kenya and South Africa offer mobile money services like M-Pesa. As for Zambia, there are mobile money services like MTN-Money, Airtel Money, and Zamtel Money. Mobile money companies in Nigeria have had access to the Nigerian market since last year, and MTN has already stated its plan to offer a mobile money service in 2019.

While mobile money transfers are on the rise, many of the nations that are seeing this growth are also hotbeds for unethical practices and international criminal organizations.

Most countries' financial reporting systems do not include mobile money, making it difficult for regulators to keep tabs on mobile money transactions. M-Pesa has been used in Kenya to launder money, bribe corrupt police officials, and pay for abduction and extortion as well as a payment vehicle.

Also, See:

The 4 Best Ways to Make Money With Cryptocurrency
How IT support services increase business efficiency?
How to Earn $60 Every Hour Playing Video Games

Kenyan Regulators’ Respond

At least one unlicensed broker in Kenya has stopped accepting deposits using the widely used M-Pesa payment method, despite the authority having yet to publicly tell anybody about the prohibition.

It also asks clients to use M-Pesa to remove all monies from their live accounts before utilizing Bitcoin to make new deposits or withdrawals.

According to the Kenyan regulations, any foreign exchange brokers or money managers operating in Kenya without a license are subject to severe penalties, including the immediate termination of all business operations in Kenya. Many, on the other hand, continue to provide their services. Because of that, these traders who are Forex trading in Kenya using Mpesa with the unlicensed FX broker will no longer be able to make transactions through the use of Mpesa if they continue to trade with unregulated service providers. After many warnings, the regulator's effort to limit the services provided by payment processors seems to be working. In addition to that, it should be said that the number of scammer FX brokers has increased in Africa. And one of the examples of fraudulent service providers is Nigma. The mentioned broker offers its customers Nigma 2 trading, which is an Android app for mobile trading. The central bank noted in a notification that “…fraudulent unregulated firms presenting themselves as online foreign exchange (forex) brokers and dealers have also surfaced.” “These companies guarantee large profits to clients while operating without the proper licenses… These criminal organizations are out to take advantage of Kenyans and put the financial industry in danger of money laundering and financing terrorism.

Mobile money regulations

Success for mobile money is due to the widespread availability of mobile phones and the wide geographic coverage provided by the many mobile service providers. When it comes to conventional banking, mobile money is often seen as a disruptive business model in the manner of the up-and-coming sharing economy firms. Users may deposit money into a mobile money account, transmit balances to other users via PIN-secured SMS text messages, and redeem deposits for normal money with most mobile money providers. Sending and receiving money using the service has a minor cost attached. Low transaction costs, better availability in rural and low-income regions, and simplicity of use are all advantages of mobile money services in emerging countries.

A license from the financial regulation is usually necessary for mobile money service providers in most countries, including Zambia, South Africa, and Nigeria. This places the service providers under the regulator's control.

Placement, layering, and integration are all aspects of money laundering. Placement is the process of transferring money from one location to another where it is less likely to be seized by authorities. After that, financial institutions and other companies use the funds to put them into circulation. By changing the cash into a financial instrument, for example, money laundering activities may be hidden behind many layers of concealment. It's important to remember that integration occurs when previously dirty money is re-injected into the economy, mostly through the banking sector. For reporting reasons, large quantities of laundered money are sometimes smurfed into smaller amounts and then used in transactions, such as mobile money transfers. Smurfing is a common method of laundering.

The lack of credit risk, transaction speed, and (often) the non-face-to-face nature of commercial relationships are all money laundering risk concerns in the mobile money arena.

Mobile money systems may, however, be structured to promote financial integrity by applying safeguards to reduce the danger of money laundering due to the simplicity of use and widespread use of mobile phones in Africa.

Regulators all throughout Africa continue to be amenable to allowing mobile money service providers to operate on a level playing field. As a result, a favourable regulatory environment is created, which encourages the expansion of mobile money's reach throughout Africa and the inclusion of more individuals in the financial system. In addition, authorities and operators will need to adapt their approaches to risk reduction and anti-money laundering compliance as mobile money continues to expand and develop.