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M-banking and money laundering
Monday, June 22nd, 2009One of the big raps against mobile banking is that it will unleash a wave of cross-border terrorism funding and criminal money laundering, because the practice is so unregulated. It’s a major concern that regulators are beinning to come to grips with.
But what if mobile banking might actually reduce AML and terrorism funding. How m-banking can reduce money laundering (Business Daily, May 27), by Matt Herbert of The Fletcher School, suggests that might be possible:
Compared to informal value transfer systems, m-banking provides exponentially more information to detect, trace and to deter the operations of criminal and terrorist organisations.
The government of Kenya should embrace mobile banking as an anti-money laundering opportunity, rather than as a money laundering threat.
The security of M-Pesa-like systems, its accessibility and its low costs are likely to draw increasing numbers of subscribers, allowing for better information collection, analysis, and law enforcement.
At the least, the shift of customers from informal value transfer systems into the formal financial sector will lessen the number of informal customers and transactions.
This in turn will allow governments to focus their resources on identifying individuals interested in informal systems only for their secretive nature. In this way, the increase in m-banking popularity may serve to doubly enable government efforts against criminals and money launderers.
