Economic Reporter :
Bangladesh Bank is actively considering a proposal to allow Nagad, the digital financial service (DFS) operator of Bangladesh Post Office to operate as a payment service provider under the MFS guidelines.
The Third Wave Technologies Limited (TWTL), a private non-bank company responsible to operate Nagad service has filed the application last month to obtain PSP license from the financial regulator following widespread criticisms for its payment service without central bank’s approval and supervision, which may allow illegal money creation and posing risks of money laundering.
A top central bank official said Bangladesh Bank is actively considering the application of Nagad and likely to allow it as a payment service provider under the Bangladesh Bank regulations to do digital payment business in line with the BB’s MFS guidelines.
“We are considering the Nagad application positively”, he said on condition of anonymity.
“At last Nagad has realized the fact that digital payment is the part of banking where regulation is necessary to address concerns over the safety and stability of financial institutions, the financial sector as a whole, and the payments system”, the BB official said.
Bangladesh Bank, the country’s lone financial regulator under the President Order 1972 last week asked all scheduled banks to restrain to restrain from giving services to the unauthorised institutions that provides services as payment service provider (PSP) or payment service operator (PSO). The central banks fears that as such operators can create illegal e-money to distort financial market stability and increase risk of money laundering.
“A PSP or PSO deal with e-money purchasing from banks and can create money illegally if it operates without central bank’s supervision. Such money creation may destiblise the whole financial system, push up inflation and trigger money laundering to finance terrorist activities”, the BB official said.
Illegal money creation and risks of money laundering through digital financial service channel came in the regulatory discussions after the TWTL launched Nagad in the country’s digital payment pace as a mobile financial service (MFS)operator and fund flow through this channel remained out of central bank’s supervision.
“We have asked all scheduled banks, mobile financial service (MFS) providers, PSP and PSO not to deal with any unauthorise dservice operators in payment landscape to avert unwanted situation”, the central bank official said.
The concern over the risks of illegal money creation and money laundering hit regulatory authorities and policy makers after the Nagad landed in the payment landscape without central bank’s license and offered higher transaction limit for its customers, which is several times higher than the limit set for 18 other operators by Bangladesh Bank.
This has distorted the level playing field of the country’s fast-growing mobile financial service (MFS) and worried digital market players who havebeen promoting financial inclusion since 2011offering cost effective convenient mobile payment service under the strict regulatory supervision.
At first, Bangladesh Financial Intelligence Unit (BFIU) expressed concern regarding money laundering opportunities due to high transaction limit of Nagad. To address the issue, Bangladesh Bank in a letter requested the Postal Department to follow financial regulations in case of Nagadoperations in order to keep financial market stable and sound.
Bangladesh Bank is actively considering a proposal to allow Nagad, the digital financial service (DFS) operator of Bangladesh Post Office to operate as a payment service provider under the MFS guidelines.
The Third Wave Technologies Limited (TWTL), a private non-bank company responsible to operate Nagad service has filed the application last month to obtain PSP license from the financial regulator following widespread criticisms for its payment service without central bank’s approval and supervision, which may allow illegal money creation and posing risks of money laundering.
A top central bank official said Bangladesh Bank is actively considering the application of Nagad and likely to allow it as a payment service provider under the Bangladesh Bank regulations to do digital payment business in line with the BB’s MFS guidelines.
“We are considering the Nagad application positively”, he said on condition of anonymity.
“At last Nagad has realized the fact that digital payment is the part of banking where regulation is necessary to address concerns over the safety and stability of financial institutions, the financial sector as a whole, and the payments system”, the BB official said.
Bangladesh Bank, the country’s lone financial regulator under the President Order 1972 last week asked all scheduled banks to restrain to restrain from giving services to the unauthorised institutions that provides services as payment service provider (PSP) or payment service operator (PSO). The central banks fears that as such operators can create illegal e-money to distort financial market stability and increase risk of money laundering.
“A PSP or PSO deal with e-money purchasing from banks and can create money illegally if it operates without central bank’s supervision. Such money creation may destiblise the whole financial system, push up inflation and trigger money laundering to finance terrorist activities”, the BB official said.
Illegal money creation and risks of money laundering through digital financial service channel came in the regulatory discussions after the TWTL launched Nagad in the country’s digital payment pace as a mobile financial service (MFS)operator and fund flow through this channel remained out of central bank’s supervision.
“We have asked all scheduled banks, mobile financial service (MFS) providers, PSP and PSO not to deal with any unauthorise dservice operators in payment landscape to avert unwanted situation”, the central bank official said.
The concern over the risks of illegal money creation and money laundering hit regulatory authorities and policy makers after the Nagad landed in the payment landscape without central bank’s license and offered higher transaction limit for its customers, which is several times higher than the limit set for 18 other operators by Bangladesh Bank.
This has distorted the level playing field of the country’s fast-growing mobile financial service (MFS) and worried digital market players who havebeen promoting financial inclusion since 2011offering cost effective convenient mobile payment service under the strict regulatory supervision.
At first, Bangladesh Financial Intelligence Unit (BFIU) expressed concern regarding money laundering opportunities due to high transaction limit of Nagad. To address the issue, Bangladesh Bank in a letter requested the Postal Department to follow financial regulations in case of Nagadoperations in order to keep financial market stable and sound.
