A Guide to Supervising E-Money Issuers
A specialized regulatory window for nonbank e-money issuers (EMIs) is one of four basic regulatory enablers for inclusive digital financial services in emerging markets and developing economies (EMDEs) (Staschen and Meagher 2018). For the purposes of this guide, EMI is defined as any regulated entity—bank and nonbank—that is dedicated to issuing e-money or similar stored-value accounts, even if it trades under a different name such as a limited-purpose bank or payments bank.
This CGAP paper aims to (i) provide general guidance to EMDE supervisors who are designing proportional approaches to EMI supervision and (ii) serve as a reference for drafting or improving EMI supervision manuals in a few specific areas. After a general introduction to the concept of proportionality and how it applies to EMI supervision, the paper describes supervisory procedures to be adopted during licensing, offsite monitoring (surveillance), and examinations of EMIs. It relies on the authors’ own experiences, interviews with a sample of supervisors,4 and existing literature, including international standards and publicly available supervisory guidance.
This paper focuses on protection of customer funds and addresses operational risk, money laundering and financing of terrorism (ML/FT) risk, and EMI business plans and offsite monitoring. There are certainly other areas that are relevant for EMI supervision that go beyond the scope of this paper. For instance, this paper does not address corrective and enforcement measures, EMI resolution, fit-and-proper analyses, cross-border aspects of EMI supervision, and the role of interoperability, cloud computing, and APIs in EMI supervision. It also does not cover every important risk area, partly because some of these areas are addressed in other papers. (See Table 1 for definitions of the most relevant risks in EMIs, some of which are discussed in this paper).