AML Compliance For High-Growth E-wallet Markets

The number of registered mobile money accounts grew by 12.7% globally in 2020, reaching 1.21 billion accounts according to industry association GSMA. This was double the forecasted growth rate, and frames the remarkable potential of the global e-wallet market. Neural Technologies’ Mobile Money solution can help enterprises ensure a safe, secure ecosystem with strict AML compliance in this high-growth landscape. 

COVID-19 undoubtedly had an amplifying effect on use of digital money tools such as e-wallets, as people around the world shifted to virtual and digital solutions for their everyday needs. Research by the University of Zurich indicates daily downloads of digital finance and financial technology applications increased by almost one-third (32.8%) across 71 assessed countries during COVID-19.

This accelerating adoption presents a transformational opportunity for financial access, but stresses an important and emerging challenge for anti-money laundering (AML) compliance and financial risk and regulation. 

As we look beyond the pandemic, the impact of these trends is becoming clear. In its Global Payments 2021 report, Boston Consulting Group (BCG) highlighted that “the move away from cash will remain a prevailing trend and that digital payments will become the default method for a growing number of consumers in the years ahead.” 

A major global study by payment provider Boku revealed that by the end of 2020 there were over 2.8 billion mobile wallets in use globally, with that number expected to skyrocket to 4.8 billion by 2025. With over 60% of the world’s population expected to hold some form of e-wallet by 2025, ensuring a safe, secure, and trusted ecosystem is a key priority for regulators.

Managing the scale of change for e-money and AML

The pace of change in this already-booming financial market is huge, with mobile wallets displacing cash in the fastest growing markets such as Southeast Asia, Latin America, Africa and the Middle East. More than 1.5 billion mobile wallets are expected to be in use in Asia Pacific alone by 2025.

According to GSMA, the global value of daily mobile payment transactions exceeded USD2 billion in 2020, with expectations that will rise to over USD3 billion by the end of 2022. Each of those daily transactions doesn’t just create a financial event, but another datapoint that operators need to be aware of for a smooth, regulatory-compliant mobile payment solution. 

When you consider the sheer scale and pace of e-wallet adoption, it’s clear why regulators are keen to ensure appropriate measures are in place to maintain this opportunity while ensuring safeguards for users, something which has been particularly important during the COVID-19 pandemic.

In the European Union, often seen as a leader in financial regulation, e-wallet operators must register as electronic money institutions (EMI) under the Payment Services Directive (PSD2), with around 450 of these institutions registered by 2022. These institutions are subject to strict anti-money laundering (AML) rules, as with traditional financial providers, including a limit of up to EUR100 stored on anonymous accounts. 

As with any AML risks, the key to addressing them is around good information—and that ultimately means good data. Customer due diligence (CDD) and know your customer (KYC) should clearly verify the identity of a customer or applicant. This helps screen out bad actors or sanctioned individuals who can create money laundering risks for operators. 

Monitoring transactions is vital to ensure providers understand, at the most basic level, who is transferring money, and where it is going. Deeper understanding should include high-risk events like rapid transfers or withdrawals, thresholds, multiple accounts under similar users, and other such flags for money laundering risks. 

Regulation is a minimum requirement

Legislation can often move ponderously through regulatory and decision making pathways, meaning even the most innovative regulatory frameworks are likely failing to keep pace with the rapid rise of e-wallets.

Such is the challenge for regulators, that the UK’s own Treasury flagged e-wallets as a ‘medium risk’ for money laundering largely as a result of the rapid evolution of the industry creating challenges for identifying and detecting high-risk events. 

Regulation should always be seen as a minimum requirement—it’s the minimum an enterprise must do to stay in order to stay the right side of the rules. But with regulators struggling to keep up, the likelihood that doing the bare minimum today won’t be suitable for tomorrow. This is why adaptive, scalable solutions that enable you to adapt to changing business conditions are key, not just for your business, but for your customers.

Neural Technologies’ own Mobile Money solution is designed in recognition of this landscape, and offers a complete AML solution. It utilizes KYC/CDD standards to meet statutory requirements starting from validating customer data, transaction monitoring, and AML reporting. Our Mobile Money solution allows for processing of any type of mobile money transaction such as top-ups, payments, money transfers and transactions, and withdrawals. 

The sophisticated link detection solution helps identify fraud risks and high-threat linkages across activities and actors, identifying fraudsters, matching names against existing sanction lists to ensure that operators comply with AML rules as well as those for combating the financing of terrorism (CFT). The fast-moving situations with sanctions resulting from the conflict in Ukraine shows how important a dynamic and adaptive solution can be in this modern landscape.

Powered by our pioneering Optimus Platform, this advanced Mobile Money solution utilizes a variety of methods for secure fraud protection and AML monitoring, designed around neural network technology, link analysis, and complex rule monitoring, to quickly and effectively identify potential risks. 

The Optimus Platform solutions enables enterprises to assess all prospective customers at the outset, identifying key risk factors as part of appropriate application due diligence. It also provides on-going monitoring through the customer lifecycle, assessing day-to-day activities and transactions for signs of fraud. 

The intuitive, user-friendly Optimus Insight platform provides clear, visual outputs that enable informed decision making, as well as the ability to export custom reports in formats required by statutory agencies.

The global mobile money market offers a remarkable opportunity to transform financial access and ease of transactions in coming years. With that growth however comes an increasing burden for AML and regulatory compliance. Neural Technologies’ Mobile Money product provides a flexible, adaptive solution that allows you to meet today’s regulatory requirements, while providing the flexibility to scale and evolve to meet changing market needs.

Discover more about Neural Technologies’ Mobile Money solution

Revenue Protection
Protect and Grow your end to end revenue chain
Data Integration
See more and do more with your data in real-time

Unlock new business opportunities with our Telco-grade signaling stack

Follow Us

Connect With Us And See What We Can Do For You

Latest News & Insights