The Central Bank of Kenya (CBK) is preparing to amend the Payments Act to allow the issuance of payment licenses to fintechs.
Details
CBK Commander, Kamau Thugge, reiterated the bank’s diligent efforts to review it Law on National Payment Systemsfounded in 2011, to create a modern legal structure that meets the operational needs of fintech organizations.
Among the contenders for these licenses are two fintech entities namely, Flutterwave and Chipper Cashalong with various other applicants.
Digging deeper
The Central Bank of Kenya (CBK) has proposed amendments to Law on National Payment Systemsto enable fintech startups to register and obtain the necessary operating licenses.
This legislative overhaul aims to remove a major legal barrier that has previously limited the expansion of fintech companies within the country, a landscape mainly controlled by commercial banks and telecommunications companies.
Because this matters
The proposed regulatory changes are expected to create a more favorable environment for fintech companies to operate legally and securely.
The change will also have a positive impact on businesses offering remittance and payment services, which have previously faced scrutiny and enforcement measures from Kenyan authorities due to concerns about money laundering activities.
Zoom out
Kenya’s financial sector is currently regulated under several key pieces of legislation such as the Central Bank of Kenya Act, the National Payment Systems Act together with the National Payment Systems Regulations 2014 and the Electronic Money Regulations 2013 .
However, existing regulations have been criticized for their lack of clarity regarding fintech operations, remittances and payment startups. This ambiguity has led to conflicts between these service providers and the Kenyan authorities, resulting in enforcement actions by agencies such as Financial Reporting Sector (FRC) and Asset Recovery Authority (ARA)which have frozen accounts and seized assets on charges of money laundering.
Source: Innovation Village
Follow us on our WhatsApp channel, Twitterand Instagramand subscribe to our weekly newsletter to make sure you don’t miss any news.
Related