Draft National Payment System Bill contains stiff penalties

…imprisonment, fines for unlicensed service providers

By Jarryl Bryan

With a view of ending the opportunities for bandits to prey on bank customers leaving financial institutions, Government at the last sitting of the National Assembly brought a draft National Payments System Bill to the floor for its first reading.
The Bill, in fact, contains provisions for persons to use “electronic money” through SIM cards and software accepted as a means of payment. There are also provisions for presenting cheques in electronic form.
There are also penalties, which range from a fine of $500,000 and two years’ imprisonment if convicted as an individual, to a $2 million fine as a body corporate. Part 12, Section 51 speaks to various offences and penalties designed to keep the payment system running smoothly.

The penalties apply to Sections seven and eight (attaining a licence before providing payment system or service). The Act states that banks, as direct participants in the system, do not have to acquire a licence. The same applies for money transfer service providers. However, section three (a) adds that they must comply with all other requirements of the Act.
The penalties also apply to Section 13, which prohibits transferring licences, as well as Section 23, which mandates compliance with the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) laws.
In Section 32, operators are also prohibited from outsourcing its services without the bank’s approval. In Section 33, they also have to seek approval in order to use agents. And then there are those who refuse to comply with any order issued by the Bank of Guyana as an administrative measure.
According to Section 50 (4), “a person who fails to comply with an order issued, pay a fine imposed or otherwise comply with administrative measures taken by the bank in accordance with this section commits an offence and is liable on summary conviction as specified in Section 51.”

Strategy
A National Payment System (NPS) is an infrastructure that provides the economy with the channels or circuits for processing the payments resulting from the many different types economic transactions that take place daily.
The Bank of Guyana (BoG) was tasked with leading the development and implementation of a strategic approach to advance the development of Guyana’s NPS, by establishing the parameters to guide policy and set priorities.
After widespread consultations with stakeholders, Central Bank, with assistance from the World Bank, last year commenced putting together a four-year comprehensive plan that would see the strategic transformation of the local payment system from paper-based mechanisms to electronic payments.
The National Payment System Strategy (2017-2021) was handed over to Government last month. This is a developmental plan that envisions a “robust, sound, efficient and inclusive National Payment System (NPS) that meets the current and future needs of the economy, support financial activity and financial sector development, advances the use of electronic payments, contributes to financial risk mitigation, achieves compatibility with international systems, and adheres to the relevant international standards, guidelines and codes.”
The 59-page strategy and action plan is centred around nine pillars of a conceptual framework developed by the Work Bank on National Payment System. These include: legal framework, large value payments, retail payments, Government transactions, securities depository, clearing and settlement, money markets, international remittances, oversight and cooperation.
It is understood that this strategy will aim to establish legal clarity and certainty to cover several areas, such as electronic funds transfer, e-money and cheque truncation. Additionally, steps will be made towards enhancing the efficiency of payment processing and the reduction of settlement times for both retail and large value transactions.
The strengthening of risk management and mitigation across the national payments system and the expansion of the accessibility of electronic payment access networks will also be under focus.
One of the stated goals was for Central Bank to seek to attract higher rates of electronic payment acceptance by vendors, merchants and other providers of goods and services, as well as advance the migration of Government to electronic payments for both the collection and disbursement of funds. Another goal is driving down remittance costs.
Back in 2016, Governor of the Bank of Guyana, Dr Gobind Ganga, had announced that Guyana could be saving as much as $6 million annually with a modernised payment system that makes optimum use of electronic payments.