Central Bank set to be sole regulator of all payment systems
By Clifton Movirongo.
To address uncertainty and inefficiencies in the national payment system regulations, the Minister of Finance and Public Enterprises, Hon Iipumbu Shiimi introduced the Payment Systems Management Bill in parliament this week to repeal the Payment Systems Management Act (Act 18 of 2003) as amended.
More recently, the payment landscape has presented an ideal, ever-changing environment, with notable advancements in payment technologies, business models, and innovative payment solutions observed almost daily, said Shiimi.
He added that as a result, the Central Bank began its legislative review of the Payment Systems Management Act in 2017, which included efforts like consulting payment legislation from other jurisdictions, engaging the national payment system industry, and consulting both the World Bank and the Financial Action Task Force (FATF) during 2020 and 2021 for input and guidance regarding the Bill.
In addition, the finance and public enterprises minister acknowledged that the national payment system was mainly characterized by bank institutions, albeit noting that ‘non-banks’ known as ‘fintechs‘ are “increasingly” providing digital and electronic payment in the national payment system, Shiimi said in the National Assembly this week when tabling the Bill.
“Given this dynamism, the need to introduce enabling, flexible and robust legislation was apparent to embrace innovation, promote competition and manage risk in the ecosystem. In addition to this, several significant gaps and shortcomings were identified in the existing legislation, which is salient in enabling the Bank to effectively regulate and oversee the national payment system,” Shiimi affirmed, adding that the proposed legislation will put the Bank in a position to promote regional and continental payment system integration and harmonize SADC payment system laws.
It comes as the Payment System Management Amendment, Act 6 of 2010, was amended to empower the Bank to set standards for charges, among other things, to enable the Bank to issue administrative penalties for non-compliance with the Act.
“The Ministry of Finance, in collaboration with the Bank of Namibia, drafted the Payment Systems Management Bill to ensure, amongst others, that it includes the definition of a beneficial owner, as the absence thereof was identified by the Namibian Mutual Evaluation Report by the Eastern and Southern African Anti-Money Laundering Group’s, to include the definition of virtual assets, given that prudential regulators are required by the FATF to regulate the activities of virtual assets known as cryptocurrencies, and enhance the powers and functions of the Bank to include the supervision and oversight of payment service providers that were previously regulated by the Payment Systems Management Body,” the minister said.
According to him, as recognized by the World Bank, the regulatory powers and functions of the Payment Systems Management Body have now been withdrawn, and from this point on, the Central Bank will be the sole regulator of all participants in the payment system management.
Moreover, Shiimi explained that having two regulators in the national payment system has previously created regulatory uncertainty and inefficiencies in the supervision and oversight of the national payment system.
He said in conclusion that the Payment Systems Management Bill, when promulgated, will enhance the Bank‘s regulatory and supervisory functions for the national payment system.
