The Central Bank of Kenya (CBK) is preparing to amend its Payments Act to allow fintechs to be issued payment licenses.
Details
The CBK’s governor, Kamau Thugge, has reiterated the bank’s diligent efforts to revise the National Payment Systems Act, established in 2011, to craft a contemporary legal structure that accommodates the operational needs of fintech organizations.
Among the contenders for these licenses are two fintech entities namely, Flutterwave and Chipper Cash, along with various other applicants.
Digging Deeper
The Central Bank of Kenya (CBK) has put forward proposed amendments to the National Payment Systems Act, to enable fintech startups to register and obtain the necessary licenses to operate.
This legislative revision is intended to dismantle a significant legal obstacle that has previously restricted the expansion of fintech companies within the nation, a landscape that has been predominantly controlled by commercial banks and telecommunications companies.
Why This Matters
The proposed regulatory changes are expected to create a more conducive environment for fintech companies to operate legally and securely.
The change will also have a positive impact on businesses that offer remittance and payment services, which have previously faced scrutiny and enforcement actions by Kenyan authorities due to concerns over money laundering activities.
Zoom Out
Kenya’s financial sector is currently regulated under several key pieces of legislation, including the Central Bank of Kenya Act, the National Payment Systems Act along with the National Payment Systems Regulations of 2014, and the e-money Regulations of 2013.
However, the 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 Kenyan authorities, resulting in enforcement actions by agencies such as the Financial Reporting Sector (FRC) and the Asset Recovery Authority (ARA), which have frozen accounts and seized assets on allegations of money laundering.
Source: Innovation Village
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