KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Sara Ndei, Cliffe Dekker Hofmeyr incorporating Kieti Law LLP
proposes a licensing and supervisory framework for VASPs operating in Kenya. The VASPs Bill seeks to mitigate risks associ - ated with virtual assets, such as money launder - ing, terrorism financing and proliferation financ - ing. It establishes licensing criteria for VASPs, requiring financial stability, robust cybersecurity measures and fit-and-proper assessments. The VASPs Bill also sets out general obligations for VASPs, including customer asset protection, ethical business practices and compliance with anti-money laundering (AML) and counter-ter - rorism financing regulations. It also introduces regulations for initial virtual asset offerings and enforcement mechanisms to ensure compliance. 2. Fintech Business Models and Regulation in General 2.1 Predominant Business Models The predominant business models in the Kenyan fintech market relate to digital banking, digital lending and payment services. Digital Banking Kenyan banks and microfinance institutions typi - cally use digital platforms to provide their ser - vices and products to their customers. As such, customers can open bank accounts, access and view their account information, and under - take transactions (such as funds transfers and bill payments) through mobile phones or other digital devices. Digital Credit Services Non-deposit credit providers (NDCPs) are enti - ties that provide credit facilities, asset financing, buy-now-pay-later arrangements, credit guar - antees, pay-as-you-go arrangements or peer- to-peer lending services to borrowers through
digital channels. NDCPs typically provide small, short-term loans to individuals and businesses, disbursed directly to borrowers’ mobile money accounts. Repayment is equally seamless, with options to use mobile apps or simple USSD codes. Payment Services Payment services encompass the systems and processes that facilitate financial transactions. These services cover interactions between busi - nesses, businesses and their customers, and even individual consumers. Several key players shape the payment service landscape, including the following. • Mobile network providers: licensed mobile network providers have significantly expand - ed financial access through their mobile money platforms (eg, M-PESA). • Payment service providers (PSPs): these are specialised entities that provide payment services such as transaction processing and technology solutions. • Banks and money remittance operators: tra - ditional banks and licensed money remittance operators facilitate cross-border payment ser - vices beyond Kenya’s borders. Money remit - tance operators are entities that facilitate the transfer of funds between individuals without the requirement of traditional bank accounts for either the sender or the recipient. Investment Services Investment service providers in Kenya are increasingly utilising technology to expand access to investment opportunities for Kenyan customers. Notable services include the follow - ing. • Brokerage: various start-ups are partnering with licensed collective investment schemes
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