Gazi Anowarul Hoque :
Nagad, a digital financial service operated by Third Wave Technologies Limited, is allegedly violating the transaction limit by Mobile Financial Service (MFS). It allows people to transact in maximum Tk 250,000 per day, more than 16 times higher than BB’s limit of Tk 15,000 per day. BB is worried for its unauthorized limit and channel, which may trigger money laundering.
The Payment System Department of Bangladesh Bank, responsible to supervise all payments under the country’s financial system has sent a letter to the Anti Money Laundering Department to address the money laundering issues to give their views on the concerned issues.
Nagad, a digital financial service, outsourced by Bangladesh Post Office to Third Wave Technologies has been setting up its operations to help customers of postal services send and receive cash through its digital channel while Third Wave Technologies is defining its service as ‘Digital Financial Services’, in practice, it’s virtually same as a mobile financial service, without any valid license, central bank officials said.
“Higher amount of transactions through MFS channel outside central bank’s supervision may trigger money laundering, which ultimately will hit hard the economy and social security”, one top central bank official told the New Nation.
He said the central bank’s concerns centered mainly to mobile financial service offered by a non-bank service provider without valid license from the financial regulatory body and its transaction limit that exceeds the central bank’s set limit for other MFS operators as it may encourage people to launder money.
“To reduce risks of money laundering, we have set limits of transactions through MFS channels. But Nagad is transacting higher amount of money beyond the regulatory limit, which will increase risk of money laundering”, he said.
Nagad, operates under the Bangladesh Postal Act, is appointing agents in different points of the country to facilitate people send and receive money through the same agent network that 17 MFS operators use under the close supervision of Bangladesh Bank.
MFS operations are set for 17 banks to check money laundering. Earlier, BB’s limit for MFS transaction was maximum Tk 25,000 per day.
“Different service limits for different players for similar services will distort regulatory mechanism and business environment”, a top central bank official said noting that this ultimately will hit hard the fast growing MFS industry where millions of poor people are beneficiaries.
The grave concern is high limit of transaction will encourage financial criminals to launder money”, he said noting that any organization that facilitates financial transactions is increasingly coming within the scope of anti-money laundering (AML) legislation worldwide.
“Nagad should not be exceptional as it deals with money transactions in real time. So, fund flow through this channel should be under central bank’s direct supervision”, he said adding that as a department of the Ministry of Posts and Telecommunications, the Bangladesh Post Office is not officially regulated.
In this regard, Mohammad Solaiman, Head of corporate and regulatory affairs of Third Wave Technologies said Nagad is operating business under the Postal Act and with no objection certificate from Bangladesh Bank. However, Dr. Lila Rashid, General Manager, Payment System Department of Bangladesh Bank said they didn’t issue any letter or license to Nagad in this regard.
In different countries, post offices play vital role in boosting financial inclusion through encouraging rural people to receive remittance, save money in their accounts with post offices. But the outsourced business model of Nagad that operates the postal service through a third party is unprecedented.
“The rapid progress made in the financial inclusion front of Bangladesh made over the years since 2011 was due mainly to impressive performance of MFS operators under strict regulatory supervision, consumer rights protections and conducive regulatory environment. So, we can’t hurt this growth”, a former central bank official said.
“A level playing field must be ensured to get benefits from innovations in financial inclusion”, but, no real time financial operation is allowed in any economies without the direct supervisions of financial regulatory bodies,” the former regulator asserted.
