Risk Management Strategies for Agents in Financial Services
Managing risks with agents involves addressing issues like inadequate liquidity, fraud, compliance risks, and counterfeit currency. Mitigation strategies include daily monitoring, capitalization requirements, training, and clear processes. Penalties for non-compliance range from warnings to termination of services. Insurance can play a crucial role in mitigating financial risks. Challenges and opportunities for West Africa and WAMZ in agent management are also discussed.
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Presentation Transcript
Agents and Cross Border Issues GROUP - D
1. How can we better manage risks with agents? What should the penalties be? 2. Agent liquidity what are the issues? How can they be fixed? 3. What is the role of insurance and how can that be a mitigating factor against any of the perceived financial risks? 4. Challenges and opportunities for West Africa and WAMZ
Risks: Risk Liquidity Description Inadequate liquidity Mitigation - Daily float monitoring - Agent captalisation requirement (onboarding) - Credit services (short term loans eg one day) Fraud Defrauds unsuspecting clients by agent eg. - over charging - Unstipulated charges - Avail channel for affected clients to report incidence ie 24/7 call center or helpdesk Regular Central Bank tracking of consumer complaints and availability of an escalations Unit - Reputation/ Customer services - Inappropriate treatment of end user (and damages the Brand) - Agent onboarding due diligence/screening and continuous review) Training Mystery Shopping or Random checks Clear processes and procedures /terms & Conditions to be adhered to during the course of being an agent - - -
Risk Description Mitigation Direct Deposits - Directly depositing into the 3rd party wallet or recipient s mobile wallet (conceals the source of funding for the depositor ) - - Awareness & training Sanctioning of culprits eg commission draw back or suspension Split Transactions - Splitting transactions into smaller band while depositing or withdrawing from client wallet (to earn higher commission or layering) Refusal to comply by the set out regulations eg transaction recording, 3rd party deposits and identity verification prior to transaction Receiving and Issuance of counterfeit currency Compliance Risk - Counterfeit - - - - Currency detectors Training Apprehending culprits Security of cash & attendants - Physical security of the agent against theft - - Insurance Adherence to KYC standards at agent level
Penalties Penalty Description Warning - Issue verbal and/or written warning (if the risk is low and 1st time offender) Commission claw- back - Hold back commission payment attributed to incident Suspension - (for risks that are repeat in nature this should not stall overall business) Short term denial of service to agent Termination - Terminating of agent service (for repeat offenders and high risk/compliance breach)
Agent Liquidity Issues and How they can be fixed Agent re-balancing - Ability to forecast the demand and supply of eValue - Capitalisation of the business Suggested Fix:- Agent re-balancing model that encompasses other players like: - Super agents that purchase ealue in bulk for re-distribution - Banks (all financial and non financial institutions including Rural community) - Wholesalers/Fuel stations (this provides diversified revenue stream)
Insurance It was observed that based on the of transactions and the nature of financial products that the agent is advised to take on an insurance policy against burglary, fire, theft by both the internal and external parties. This can be achieved through a tiered KYC regime. The agents should be categorised and the best agents are advised to take up the insurance policy (note this is outside the Telco mandate)
Cross Border: Challenges and Opportunities for West Africa and WAMZ Opportunities 1. Strong agent network leads to extension into other financial services such as insurance banking and collections 2. Employment Opportunities 3. Business expansion and cross border trading 4. Deposit mobilization 5. Government payments 6. Deepening financial inclusion 7. Promoting cashless economy and safety of funds Challenges 1. Exchange rate risk fluctuations (this was not considered as a risk as it is the market determined) 2. Interoperability (both at country and individual industry players) 3. Settlement Risk/clearing; 4. Differences in the regulation regimes eg limits & laws 5. Infrastructure (complex IT systems ) 6. Consumer awareness (training) 7. Money Laundering & Terrorist Financing monitoring and control
Merci Q&A
