Regulating Banking Agents

Mar 01, 2011 | M. Tarazi, P. Breloff | CGAP
This Focus Note reviews global regulation of the use of agents by banks (and where noted, nonbank service providers) and focuses on four questions related to the safe and scalable use of agents: Who can be an agent? What roles can agents play in the provision of financial services? On what commercial terms can banks engage agents? What is the extent of bank liability for agents? This Focus Note concludes that regulators can safely permit the use of bank agents to offer financial services and verify customer identity for know-your-customer purposes with minimal restrictions on agent eligibility, compensation, and structuring—provided that regulators hold banks liable for the provision of financial services by their agents.