Institutions get okay to launch agency business

In a bid to make the sponsor institutions closely regulate their agents, CBK has crafted a clause in the contract between the two parties that will compel the main institutions to take full liability for all actions or omissions of the agent.

“This responsibility extends to actions of the agent even if not authorised in the contract so long as they relate to banking services or matters connected therewith,” the regulation circular reads.

Settlement of transactions is another major highlight of the regulations, with agents required to adopt technologies to ensure that the transactions they conduct are immediately reflected in the main financial institutions’ records.

Payment system

Further, they will only carry out transaction as long as they have funds.

In what could entice investors to join the agency business, CBK has allowed agents to serve multiple banks provided they have capacity and signed separate contracts.

Agents will be expected to check against money laundering by reporting abnormal transactions and to identify their customers on two factors, like IDs, PINs, passwords.

“The most important thing in the payment system is settlement of transactions which the National Payment System Bill will help strengthen,” Mr Mwaura Nduati, the head of national payment system at CBK, said in an earlier interview.

He added that the Bill, once enacted, will help address the integration of the innovative payment systems in the country, including mobile money transfers and online banking in a bid to boost overall financial access.