Comparative Guides

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4. Results: Answers
How are the following key technologies in the fintech space regulated and what specific legal issues are associated with each? (a) Internet (e-commerce); (b) Mobile (m-commerce); (c) Big data (mining); (d) Cloud computing; (e) Artificial intelligence; and (f) Distributed ledger technology (Blockchain, cryptocurrencies)

Answer ... (a) Internet (e-commerce)

No specific regulations exist as yet, although parts of the Kenya Information and Communications Act apply regarding consumer protection. The main legal issues experienced by e-commerce platforms are privacy, payment fraud, identity theft, taxation and access to complaints system.

(b) Mobile (m-commerce)

The National Payment Systems Act regulates mobile money transactions, while the Money Remittance Regulations govern international transactions executed through players such as Western Union and Alipay. Cybersecurity and privacy remain the biggest challenges.

(c) Big data (mining)

No specific regulations exist as yet. However due to the extraterritorial reach of the EU General Data Protection Regulation, the industry must adhere to principles of data protection. The main legal issues faced are privacy related, with many corporates choosing not to implement an explicit consent requirement, but instead opting to bundle this with other terms and conditions.

(d) Cloud computing

No specific regulations exist as yet, although certain provisions, especially in the financial services sector, do relate to cloud computing. For banks, the Central Bank of Kenya (CBK) Guidelines on Outsourcing include comprehensive provisions on outsourcing information system management, which cover data centres and cloud computing. For payment service providers (PSPs), the Cyber Security Guidelines for Banks and PSPs include provisions on outsourcing of cloud services. There are also concerns regarding the hosting of sensitive data in the cloud and restrictions on the cross-border transfer of personal identifiable data.

(e) Artificial intelligence

No specific regulations exist as yet. AI Kenya is an association that is lobbying for favourable laws; but thus far, most corporates have adopted analytics, roboadvisers and machine learning, but not artificial intelligence.

(f) Distributed ledger technology (Blockchain, cryptocurrencies)

No specific regulations exist as yet, but an official government taskforce – the Distributed Ledgers Technology and Artificial Intelligence Task Force – has prepared a report on this which will inform policy formulation and implementation. The government has not embraced cryptocurrencies, as evidenced by the warning issued by the CBK urging the public not to trade in cryptocurrencies, as they are not legal tender in Kenya. Blockchain technology has been embraced and is used to address some issues regarding a lack of transparency issues (eg, it has been used in the Lands Registry to achieve greater transparency).

For more information about this answer please contact: Richard S. Malebe from RSM Law LLP