A Legal Analysis of the Law Regulating Mobile Money in Kenya: A Case Study of Nairobi

DECLARATION -~·•··················································································~·····················APPROVAL ......................... ~························································································· II

DEDICATION .............................................................................................................. iii

ACKNOWLEDGEMENTS·····~·····································"·················································· iv

TABLE OF CONTENTS .....•..•......•.................................................................................. v

TABLE OF STATUTES AND REGULATIONS ................................................................ viii

REGULATIONS .......................................................................................................... viii

TABLE OF CASES ........................................................................................................ ix

ACRONYMS .................................................................................................................. x

ABSTRACT .............................................................................. ~ ................................... xi

CHAPTER ONE ............................................................................................................. 1

GENERAL INTRODUCTION .......................................................................................... 1

1.0 Introduction .............................................................................................................. 1

1.1 Background of the study ............................................................................................ 1

1.2 Statement of the problem .......................................................................................... 6

1.3 Objectives of the study .............................................................................................. 6

1.3.1 Specific objectives .................................................................................................. 7

1.4 Research questions ................................................................................................... 7

1.5 Scope of the study .................................................................................................... 7

1.6 Significance of the study ............................................................................................ 7

1.6.1 Hypothesis ............................................................................................................. 8

1. 7 Methodology ............................................................................................................. 8

1.8 Literature Review ...................................................................................................... 8

1.9 Chapterisation .......................................................................................................... 15

V

CHAPTER TWO ............................ ~ ............................................................................. 16

THE CONCEPTS AND THE VARIOUS MODELS OF MOBILE MONEY IN NAIROBI ...... 16

2.0 Introduction ............................................................................................................. 16

2.1 Mobile Money ........................................................................................................... 16

2.2 Why Mobile Money ................................................................................................... 17

2.3 Categorization and Concepts ..................................................................................... 18

2.3. l Bank-Focused Model. ....................................................................... , ..................... 18

2.3.2 Bank-Led Model. .................................................................................................... 18

2.3.3 Nonbank-Led Model/ Mobile Network Operator Model (MNO) ................................... 19

2.2.4 Hybrid Model. ........................................................................................................ 20

CHAPTER THREE ....................................................................................................... 23

THE LEGAL REGIME OF MOBILE MONEY AND THE RISKS ENCOUNTERED BY

CONSUMERS AND SERVICE PROVIDERS .................................................................. 23

3.0 Introduction ............................................................................................................. 23

3.1 The Legal Regime ..................................................................................................... 23

3.2 Pertinent legislations influencing the operation of Mobile Money services in Kenya ....... 24

3.2.1 The Bank .............................................................................................................. 24

3.2.2 Information and Communications Technology ......................................................... 26

3.3 The New Regulatory Framework ................................................................................ 28

3.3.1 The National Payment System (NPS) Regulations of 2014 ........................................ 28

3.3.2 Proceeds of Crime and Anti-Money Act No. 9 of 2009 .............................................. 32

3.4 Challenges .................. , ............................................................................................ 33

3.4.1 Legal Challenges ................................................................................................... 33

3.5 Risks ....................................................................................................................... 35

3.5.1 Operational risk ..................................................................................................... 35

3.5.2 Security risk .......................................................................................................... 36

3.5.3 Reputational Risk ................................................................................................... 37

vi

CHAPTER FOUR.~ ........................................................................................................ 39

THE RECOMMENDATIONS FOR THE MODIFICATIONS OF THE LEGAL REGIME ON

BANKING IN NAIROBI .............................................................. w••························g···· 39

4.0 Introduction ............................................................................................................. 39

4.1 Recommendation ..................................................................................................... 39

4.1.1 Legal Recommendation .......................................................................................... 39

4.2 Other Recommendations .......................................................................................... .41

4.2.1 Backup and recovery ............................................................................................ .41

4.2.2 Monitoring against threats ...................................................................................... 42

4.2.3 Education and review ............................................................................................ .42

4.2.4 Approval for Mobile Money Services ........................................................................ 42

4.2.5 Harmonization ...................................................................................................... .43

CHAPTER FIVE .......................................................................................................... 44

THE RESEARCH FINDINGS AND CONCLUDING REMARKS ................. .., ................... 44

5.0 Introduction ............................................................................................................ .44

5.1 Conclusion ............................................................................................................... 44

BIBLIOGRAPHY ........................................................................................................ 47