Answer ... (a) Crowdfunding, peer-to-peer lending
No specific regulations exist as yet. However, banks and payment service providers require approval from the Central Bank of Kenya (CBK) in order to engage in these activities. Cybersecurity and privacy remain the key legal issues for players in this sector.
(b) Online lending and other forms of alternative finance
Digital lending is booming in Kenya. No specific regulations exist as yet, but if passed into law, the Financial Market Conduct Bill may regulate this. The CBK has on several occasions had to step in due to the rogue nature of lenders. The biggest concerns from a regulatory point of view are high interest rate and privacy violations.
(c) Payment services (including marketplaces that route payments from customers to suppliers (eg, Uber and AirBnb)
Apart from the National Payment Systems Act and to some extent the Banking Act, no other regulations govern payment services. There is thus a gap in regulation, as players such as integrators and mobile virtual network operators are not covered by the National Payment Systems Act. Thus, the greatest legal concern in this sector is the lack of appropriate regulation that covers the entire ecosystem. The Payment Association of Kenya was formed to address this and to push for legislation akin to the EU second Payment Service Directive, which addresses emerging trends such as open banking.
The Forex Bureau Guidelines 2011, the Central Bank of Kenya (Foreign Exchange Bureau) (Penalties) Regulations 2009 and the Money Remittance Regulations 2013 all apply. The most significant challenges in this sector are terrorist financing and money laundering.
Forex trading is licensed under the Capital Markets (Online Foreign Exchange Trading) Regulations, 2017. The key legal issues are terrorist financing and money laundering.
(f) Investment and asset management
The Capital Markets Act (Cap 485A), the Capital Markets (Licensing Requirements) (General) Regulations 2002 and the Capital Markets (Collective Investment Schemes) Regulations 2001 all apply. The main issues are investor protection and systemic failure.
(g) Risk management
Risk management is covered under the Central Bank of Kenya Guidelines on Risk Management. A similar set of guidelines specifically covers savings and credit cooperative societies. The legal issues include data breaches and cybersecurity.
The uptake of roboadvisers is still low compared to that of chatbots. No specific regulations as yet exist.
No specific regulations as yet exist. The greatest legal challenge is the requirement to obtain approval from the Insurance Regulatory Authority, which is yet to give regulatory direction in this regard. The 2018-2022Strategic Plan of the Insurance Regulatory Authority aims at amongst others promoting innovation, Regulatory Sandbox and insuretech.