Agent means a natural or legal person who conducts permissible activities on behalf of an e-money issuer upon the Central Bank’s non-objection.
AML/CFT Anti-Money Laundering and Countering the Financing of Terrorism.
Automated Advice Tools Automated Advice Tools or ‘Robo-Advisers’ are digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. Essentially, this involves a computer programmer creating software that provides investment advice to the clients of a financial services firm, based on parameters that are tied to their investment strategy.
Bitcoin ATM Bitcoin ATM (a.k.a. BTM) refers to an automated machine used to exchange fiat currency for bitcoin and/or other virtual currency, and vice versa. Depending on its programmed functionality, persons can use a bitcoin ATM to purchase bitcoins (and possibly other virtual currency) (mono directional machines) or to both purchase virtual currency and cash-out virtual currency for fiat currency, by withdrawing the fiat currency in exchange for the convertible virtual currency at the ATM (bi-directional machines – i.e. cash-in/bitcoin-out or vice versa).
Business Continuity refers to a Fintech entity’s arrangements which aim to ensure that it meets agreed service levels even if one or more components of the system fails or if it is affected by an abnormal external event.
CBDC Central Bank Digital Currency (CBDC) is potentially a new form of central bank money that can be distinguished from reserves or settlement balances held by commercial banks at central banks (BIS).
Clearing means the process of transmitting, reconciling and, in some cases, confirming transactions prior to settlement, potentially including the netting of transactions and the establishment of final positions for settlement.
Cryptoassets are cryptographically secured digital representations of value or contractual rights that use some type of distributed ledger technology (DLT) and can be transferred, stored or traded electronically. This terminology is used interchangeably with virtual assets in this paper. Also, in instances where cryptocurrency/virtual currencies are used, the same meaning is implied as cryptoassets or virtual assets.
Cryptocurrency Exchange A cryptocurrency exchange is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, including fiat money or other digital currencies.
Custodian means an entity, often a bank, that safe keeps and administers securities for its customers and that may provide various other services, including clearance and settlement, cash management, foreign exchange and securities lending (Basel Committee on Bank Supervision1).
Digital Wallet A digital wallet refers to an electronic device or online service that allows an individual to make electronic transactions. This can include purchasing items on-line with a computer or using a smartphone to purchase something at a store. An individual's bank account can also be linked to the digital wallet.
Distributed Ledger Technology Distributed Ledger Technology (DLT) refers to the protocols and supporting infrastructure that allow computers in different locations to propose and validate transactions and update records in a synchronized way across a network. New technology such as Bitcoin maintains a distributed database in a decentralized way by using a consensus-based validation procedure and cryptographic signatures (BIS).
Electronic Money (E-Money)1 means monetary value represented by a claim on the issuer, which is— (a) stored on an electronic device; (b) issued on receipt of funds of an amount not less in value than the monetary value issued;and (c) accepted as a means of payment by persons other than the issuer, so however that the funds referred to in (b) above shall not be treated as a deposit under this Act (FIA 2008).
Electronic Money Issuer (EMI) means a category of persons (other than a licensee) who has been registered bu the Central Bank to issue E-money pursuant to the E-Money ministerial Order.
Fintech can be described as “technologically enabled financial innovation that could result in new business models, applications, processes, or products with an associated material effect on financial markets and institutions, and the provision of financial services” - Financial Stability Board (FSB).
ICO Initial Coin Offering (ICO) is a type of funding using cryptocurrency.
Innovation Hub An Innovation Hub is an innovation facilitator set up by supervisory agencies that provide support, advice or guidance to regulated or unregulated firms in navigating the regulatory framework or identifying supervisory policy or legal issues and concerns (Basel Committee on Bank Supervision ).
Non-Bank Non-Financial Institution (NBNFI) means an entity involved in the provision of retail payment services whose main business is not related to taking deposits from the public and using these deposits to make loans.
Non-Interbank Payment System Operator (NIPSO) means an Operator of a payment system owned or operated by an entity, which is not a bank, which facilitates the electronic transfer of funds between or among entities other than banks.
Outsourcing means the contracting or sub-contracting of one or more activities relating to the operation of a system or the issuance and management of a payment instrument to an independent third party. Such third party provides services to the issuer.
Oversight2 means in relation to a payment system, a public policy activity principally intended to ensure the safety, soundness, reliability and efficiency of the payment system in order to promote the effectiveness of monetary policy, contribute to the stability of the financial system by limiting the risk of systemic crises, and ensure the preservation of public confidence in money, money transfer mechanisms and the use of payment instruments.
Payment Service means a service which enables cash deposits and withdrawals, execution of a payment, the issue or acquisition of a payment instrument, the provision of a remittance service, and any other service functional to the transfer of money. It includes the issue of electronic money and an electronic funds transfer but excludes the provision of a solely online or telecommunication service or network access.
Payment Service Provider (PSP) means a person who provides a payment service and is registered or licensed to carry out one or more of the activities specified in Section 2.4 of the Draft Guideline for Non-Bank Non-Financial Institutions in Retail Payments in April 2020.
Payment System3 means any organized set of infrastructure, persons, procedures and rules allowing the transfer of money, including by means of payment instruments, or the discharge of obligations on a gross or net basis.
Regulatory Sandbox A Regulatory Sandbox usually refers to live testing of new products or services in a controlled environment. Sandboxes may be considered to be more than just a dialogue or an informal exchange, as they engage a supervisor’s active cooperation during the test period. Sandboxes also imply the use of legally provided discretions by the supervisory agency. Their use depends on the jurisdiction (Basel Committee on Bank Supervision4).
Settlement means the final, irrevocable transfer of funds between parties in a payments system. It is the stage where funds are moved from payer’s account to payee’s account. This involves:
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i. Collection and integrity checks of the claims to be settled; ii. Ensuring the availability of funds for settlement to occur; iii. Facilitating the settlement of the claims between payer and payee; and iv. Logging and communication of settlement to the parties concerned. |
Significant Shareholder5 means a person who either alone or with one or more affiliates or relatives or connected parties is entitled, whether by agreement or otherwise, to exercise twenty percent or more of the voting power at any general meeting of the licensee and the terms “significant” and “significant interest” shall be construed accordingly.
Virtual Assets A Virtual Asset is a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes. Virtual assets do not include digital representations of fiat currencies, securities and other financial assets…” Virtual assets are distinct from fiat currency or “real money” which is the legal tender or national currency (paper and coins) of a country (FATF Recommendatory Note October 2018 6).
Virtual Assets Service Providers Virtual assets Service Providers (VASP) means any natural or legal person who is not covered elsewhere under the FATF Recommendations7 , and as a business conducts one or more of the following activities or operations for or on behalf of another natural or legal person:
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i. exchange between virtual assets and fiat currencies; ii. exchange between one or more forms of virtual assets; iii. transfer8 of virtual assets; iv. safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets; and v. participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset. |
1Section 2 of the FIA 2008
2Basel Committee on Bank Supervision - Sound Practices – Implications of fintech developments for banks and non-banks (BIS – February 2018)
3Section 2 of the FIA
4Basel Committee on Bank Supervision - Sound Practices – Implications of fintech developments for banks and non-banks (BIS – February 2018)
5Section 2 of the FIA
6http://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF%20Recommendations%202012.pdf
7http://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF%20Recommendations%202012.pdf
8In this context of virtual assets, transfer means to conduct a transaction on behalf of another natural or legal person that moves a virtual asset from one virtual asset address or account to another.
