To address AML oversight, BOJ creates sandbox for fintech applicants
Published:Thursday | May 7, 2020 | 3:55 PM
FOUR MORE applicants are vying to provide mobile payment services in various formats, including one applicant seeking to use phone credit as a cash equivalent, but successful applicants will fall under a new framework the regulator calls its “sandbox”.
The applicants include a cambio, a banking institution and two fintech companies, the BOJ said at a briefing on Thursday.
The regulator wants to inspire innovation, while complying with anti-money laundering, AML, guidelines. The central bank is also keen for Jamaica to be dropped from the European Union’s list.
“Rest assured, Jamaica wants to get off of that grey list, and the Bank of Jamaica is committed to leading that process. In 2021, mark my words that we will be taken off the EU blacklisting,” said Governor of the BOJ Richard Byles in the conference call on Thursday, while noting that the sandbox would assist in the process.
In February, Jamaica was reportedly among seven countries placed on a grey list by the Financial Action Task Force, FATF, for what the entity described as weak links among some companies to money laundering.
In Jamaica, total electronic retail payment transactions totalled $4 trillion in 2019, of which less than one per cent, or about $11.7 billion, related to mobile wallet usage.
The move to broaden mobile wallets aims to reach the unbanked population.
Current mobile wallet operators include MyCash, affiliated with Sagicor Bank; Quisk, affiliated with National Commercial Bank; and ePay, affiliated with Alliance Finance.
The BOJ said it followed best practices in several nations that created their own sandboxes for new technologies from small firms, which, in turn, are required to hold accounts with regulated entities. The BOJ will monitor these new providers over a period of two years.
The sandbox regulations replace those for Electronic Retail Payment Services, or ERPS 2, which were withdrawn on March 2. The sandbox regulations took effect two weeks later on March 16.
Natalie Haynes, the BOJ deputy governor in charge of banking, currency operations and financial markets infrastructure, said in the conference call that the ERPS regulations were not comprehensive enough. For example, a non-regulated payment provider, while fit and proper, would not necessarily fall under the Proceeds of Crime Act, she said.
“Yes, we are cognisant of anti-money laundering payment issues, that is why we have taken this approach,” said Haynes. “So that’s what we are trying to resolve, and that’s why we have taken this approach.”
Under the initial phase of the sandbox, fintech companies and other regulated firms, such as cambios, remittance providers, securities dealers with permission from the Financial Services Commission, and banks, will form a partnership with deposit-taking institutions for delivery of payment services.