financial inclusion

Compliance Carols

This is the time of year to roll out the platitudes and look back over the past 12 months, at the high points and low points  and this blog is no exception.

2014 has been a great year for compliance, mainly thanks to the numerous investigations into rate rigging, market

Christmas Candle

Christmas Candle

manipulation and sanctions breaches which although on a global scale, have affected the Asia Pacific region.

Terrorist financing

Starting on a very sombre note, the Australian police force has arrested and charged two men with giving AUD15,000 to ISIS by funding flights for Australians who went to join the jihad in Syria. There is no evidence linking this to the tragic siege in a Sydney cafe in December, perpetrated by an apparently mentally ill man. Nor are their any direct links between that and the barbaric terrorist attack on a school in Peshawar carried out by the Taliban who murdered more than 130 people, the majority of whom were children. Who is funding the Taliban? The UK, US and foreign aid budgets have been variously named as unwitting donors. But that is all old news. Terror was still being funded in 2014.

Last Christmas I broke the law for you

BNP have claimed the top of the Christmas tree this year with their admission to breaching US sanctions on Sudan, Iran and Cuba, accepting the largest financial penalty to date issued for this type of breach, an eye watering USD8.97bn, which is roughly how much money it sluiced for sanctioned entities between 2004 and 2012. The penalty has focused attention on sanctions, and upon the intricate systems used by BNP to hide transactions.

He sees when you are grafting, he knows when you’r e on the take

Corruption gained a very high profile in APAC this year, with President Xi Jinping launching merciless attacks on former allies and fellow politicians who have skimmed from the national coffers. Although some view this as a political purge with corruption used as an overcoat, the message sent out is loud and clear: you’d better watch out, you’d better not graft.

Lonely this Christmas

Hong Kong’s Independent Commission Against Corruption officers will surely be celebrating this week  as it landed a prize scalp. A jury found HK’s former second official – Rafael Hui – guilty of accepting HK$8.5m (£700,000) from executives of the Sun Hung Kai Properties development company. The case has exposed the intricate links between the SAR’s government and powerful property developers; Hui’s case is the latest conviction. He is due to be sentenced in time for Christmas in Hong Kong’s jail, which will be a far less chilling residency than those of peers in Mainland China.

All you want for Christmas is a job in KYC

Recruitment in Asia Pacific compliance is still booming. Banks in Hong Kong are looking for lawyers to shore up their regulatory defences but all is not lost for those without a law degree. Back in August, recruiters in Singapore were crying out for customer on boarding and know your customer specialists, as well as project managers to fill posts. While the legal eagle-eye view on financial crime is still viewed as a safe bet, firms still need hands-on practitioners to do the real work.

Financially include the world

One of the biggest campaigns to gain ground in 2014 is the rally behind financial inclusion –  lead by various non-governmental organisations including the Bangkok head-quartered  Alliance for Financial Inclusion. Financial inclusion aims to provide appropriate financial services to those who are excluded from the financial sector and as a result, are at the mercy of ruthless money lenders, usurers and criminals who use exploitation – whether via labour or sex – to earn money. If you could borrow money from someone who would not try to sell you or your children into slavery, you would, wouldn’t you? If the world’s biggest banks are looking in earnest to change their reputations for the good, they could do worse than to reach out to the less profitable sections of society, who could do with some support.

12 corps avoiding… or is that evading?

To round off with some festive cheer, let’s all join in with a rousing chorus of the 12 Tax Dodgers of Christmas, 38Degrees’ reworking of a popular Xmas carol to highlight those who chose to hide their wealth rather than paying taxes in the country where they make their vast fortunes. Step up Amazon, Caffe Nero, Johnny Walker et al.

Or maybe it should be‘O come all ye shameful.’

First published on the ICA blog in December 2014.

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Big banks can aid financial inclusion and raise their social kudos

Last week, India’s Prime Minister Narendra Modi hit the headlines with his promise of bank accounts for every household in the country, a bid to offer help to the country’s poor. The initiative is part of a movement towards financial inclusion, which means making financial services accessible by people who do not have formal identification documents, fixed abodes or even known dates of birth. Financial inclusion can be a sticky wicket for large financial institutions, however, as this same group of people can be defined, albeit unfairly, as high-risk and the costs of compliance with anti-money laundering rules can render financially inclusive products  uneconomical. FCA - aadhaar

PM Modi’s  Jan Dhan Yojana (Scheme for People’s Wealth) would rely on the biometric data obtained for the Aadhaar Unique Identification Number (UID) programme to remove some of the account opening requirements which have caused financial inclusion in the past.

The scheme is targeting 75m Indians who receive welfare payments and subsidies for grain, fuel and fertiliser, offering ‘account holders a debit card and accident insurance cover.’The aim is to reduce poverty by safeguarding salaries in banks and to stem corruption around cash hand-outs. With fewer people in the chain, there will be fewer hands on the rupees and reduced attempts at syphoning some of it off.

The large scale financial inclusion plan looks good from this perspective, although it is facing a few setbacks.

Another grand scheme designed to protect the integrity of the financial system is putting up one of the main obstacles to financial inclusion. Anti-money laundering (AML) rules globally recommend  proof of identification backed by proof of address provides the ‘one plus one’ basic requirement for opening a bank account, applying for a loan, credit card and other financial products. Many people in India have neither. The financially excluded create a risk/reward scenario which is often viewed unfavourably by financial institutions. The amount of work required to ID them and monitor their accounts, which contain relatively small balances, makes developing inclusion focused products cost expensive and not viable.

In poorly supervised markets, when the better regulated firms do not step in, the less scrupulous take centre stage. Financial inclusion as a movement is ripe for the plucking. The movement is about providing appropriate, ‘smart’ financial services to safeguard the funds and livelihoods of the poor, to keep money-lenders and loan sharks at bay.

One Indian pre-paid card provider I approached during research for a training course on financial inclusion had no idea what AML meant; but he was keen to learn and asked for guidance on where to find information on the subject. He is a businessman who sees an opportunity to make money, albeit from the backs of the low salaried. Modi’s scheme is not without its detractors. New money payment providers and services look beyond and operate outside of banking, and are championed by non-banking institutions. New players include on-line platform providers, (think Paypal and Transferwise), mobile money (M-Pesa in Kenya, Afghanistan, India and South Africa) and digital or crypto-currency (Bitcoin, Mazacoin, Auroracoin) can be attuned to focus on financial inclusion.

Nonetheless, ‘Big Banking’ has a part to play here. Larger financial institutions have a social responsibility to step up and create, or at least endorse, products offering fair and transparent financially inclusive solutions. They might not make a mint from it, but their social kudos will reap the benefits.

First published on the International Compliance Association blog.

Financial exclusion keeps Asia’s poor shackled to debt

Would you ever use a loan shark to borrow money? If you have a bank account, a credit rating, an address and an identity card, the chances are you will never need to. Many people in Asia, however, have no choice and the consequences of using illegal and unscrupulous lenders are catastrophic, resulting in spiralling and impossible to pay interest payments, violence and, tragically, slavery. Providing access to fair and transparent lending schemes is slowly gaining ground in Asia. FCA-loanshark

In Northern Thailand, loan sharks prey on the stateless groups living along the Thai/Burma border. The Children of the Forest project in Sangkhlaburi, north western Thailand, works with stateless children and mothers and have seen the horrendous consequences of dealing with loan sharks.

“Many of the Burmese refugee camps are just across the border in Thailand, set in dense jungle where mosquito borne diseases such as malaria and dengue are rife. If someone in a family without papers catches dengue and requires hospitalisation they must pay the hospital in full as they cannot access the cheaper health care offered to Thai identity card holders. Without the funds to pay, people turn to the local money lender who demands swift repayment and adds high interest. When the family cannot meet the payments, which is often the case, a so-called friend of the lender will step in and offer the eldest child in the family a job in Bangkok, in exchange for clearing the debt. They may even throw in the first month’s salary as a goodwill gesture to the parents. In most cases, the ‘friend’ is a child trafficker who sends children to work in bonded labour or into sexual exploitation,”one worker told me.

This happens simply because the family had no choice but to turn to an unregistered, illegal money lender. Organisations like Children of the Forest are able to step in and rescue children if they have the right information and are there at the right time to intervene.

According to the World Bank, approximately 2.5bn people, have no access to the supervised banking sector, leaving them open to exploitation by illegal lenders. Global campaigns to promote financial inclusion – bringing fair and transparent financial services to the world’s poor – are taking off in Asia, as well as in Africa and South America. Financial inclusion is a global, G-20 endorsed campaign which aims to improve livelihoods and ultimately, to squeeze out the loan sharks who prey on the poor. The inclusion campaign is relatively new – its founding Principles were developed by the G-20 in 2010 – but it is working on improving the ability of the global poor to save, borrow and protect themselves from crime and natural disaster by developing new financial systems.

Financial inclusion means provided appropriate saving and lending services of small amounts on a large scale. It calls for innovative solutions that reach local communities without the burden of strict regulations, which exclude the poor from the banking sector. It means finding a compromise for the people who lack formal identification, have no fixed abode and may not know their date of birth.

The amounts of money earned, saved and transacted by those in need of financial inclusion are small, which makes them unattractive clients for traditional banking services. The risk/reward ratio does not make sense. So, smaller banking-lite services, such as mobile-money, micro-lending, some pre-paid debit cards and financial education projects are already working towards providing fair services to those who need them.

The Sold Project in north Thailand runs a scheme providing educational scholarships to families. The money is held in an account by the project and can only be used to pay for education, schooling, clothes, transport. The families can access their scholarship account to follow their spending.

A Sold Project worker told us:“This works really well. People are happy if the scholarship account has more money and add money to it themselves. They are encouraged to apply for other scholarships and loans and not rely on us.”

Providing some small amount of financial education and a secure savings option changes how people manage money, and in this case, changes the lives of future generations.

Back in July, Police officers in Phuket took a swing at illegal lending They arrested five enforcers of a loan shark ring, which had been charging 20 percent interest per month and intimidating people who did not pay on time. The same thing happens across the continent. Where there are people in need and little government oversight, someone will step into corner the market.

The arrests in Phuket show that Thai police are paying attention, although their reputation has not always been one of pure intentions. Often, they provide the best debt collection services. You can sell your loan to the police, minus a 20 per cent cut and allow them to recoup the monies owed, using their influence and uniform to make bad debtors cough up.

With a little more awareness, however, the campaign for financial inclusion could be hugely effective across Asia, reducing the misery brought about by poverty and creating brighter futures for Asia’s youth.

This article first appeared on AsianCorrespondent.com

FATF raises profile in 25th year with 8 new objectives

The Financial Action Task Force (FATF) held its annual plenary session in June, announcing the latest additions and deductions to and from its country watch-lists, as well as presenting eight objectives for the coming year.FCA - FATF Logo

Iran and North Korea hold their places firmly in the utterly non-compliant list with the FATF’s 40 recommendations on anti-money laundering and counter-terrorist financing (AML/CTF). AlgeriaEcuadorIndonesia and Myanmar have not made sufficient progress to get themselves off the list of countries under strict supervision by FATF for not making enough progress to change their legal frameworks. Ethiopia, Pakistan, Syria, Turkey and Yemen have and are still being monitored but it appears their efforts are moving in the right direction.

The FATF is no longer monitoring Kenya, Kyrgyzstan, Mongolia, Nepal and Tanzania under the anti-money laundering compliance process.

The objectives

The eight objectives for 2014/15 set out by new FATF President Roger Wylie offer an insight into where the AML/CTF standard setter will focus its resources and could shed light on policy areas relevant to different business sectors.

  1. Raising the profile of the FATF in its 25th year and communicating its continued relevance – we could see the FATF having a stronger voice on the international stage, a sign that governance risk and compliance could be under the spotlight.
  2. Working with the FSRBs to address the issue of regulatory arbitrage – look out for legal changes. As the EU used to call it, ‘harmonisation’ of legal frameworks squeezes out the differences in national policies which makes it easier for an over-arching body to enforce the rules.
  3. Emphasising the effectiveness component of mutual evaluations – it is not what you do, it is the results of what you do that count. The Fourth round of Mutual Evaluations will have an effectiveness pillar; jurisdictions will be assessed on the impact their legal framework is having on achieving the standards set out in the 40 recommendations.
  4. Ensuring quality and consistency in mutual evaluation reports across the global network – FATF Style Regional Bodies (FSRBs), sometimes referred to as ‘associate members’, carry out much of the mutual evaluation legwork and the FATF wants to ensure that they are ‘clear, fair and explicit in their evaluations and reports.’
  5. Promoting meaningful engagement and open communication with the private sector – The FATF has embraced the idea of sharing information with the sector for which it sets the standards. The revision of the 40 recommendations in 2012 was at the behest of the private sector and followed lessons learned by AML/CTF practitioners. The standard setter is also working to a faster pace. Last year’s report on financial crime in new payment products and services took a few years to be researched, produced, approved and published.  In the 12 months since then, the FATF has since published a new report on ‘virtual currencies’ which is a deeper look at a sector that was skimmed in the 2013 report. Look out for more initiatives from the FATF to engage with and learn from the private sector. This training course looks the concept in greater detail.
  6. Working with the G20 on areas of mutual interest, including corruption and beneficial ownership – Financial inclusion is another pillar of the G20 which could come up in the next 12 months. We could see some more work on the financial crime risks associated with new products designed with financial inclusion as an objective.
  7. Considering the risks associated with virtual currency and potential policy responses – Financial Crime Asia goes into more detail here.
  8. Continuing the FATF strategic view discussions, including prioritisation of the FATF’s work – A three year strategy for AML/CTF standards, according to the President’s report.

Illegal money transfers ‘not a threat’ to Western Union

Malaysia’s money services businesses — money changers and remittance agents — don’t see any business threat from those providing illegal means to transfer money outside the country, a surprising revelation at a time when flight of illegal money is a concern for most countries around the world.

While citing the availability of competitive rates for the services provided by them and the industry regulations by the banking and financial regulator Bank Negara Malaysia (BNM), the leading players in the sector are, in fact, oozing with optimism on the prospects of growing their businesses in Malaysia.

“We do not see illegal money transfers as a threat. If anything, their customer base is an opportunity for companies like ours to offer a convenient, fast, secure, cost-effective option,” Western Union Malaysian CEO Chew Mei Ling (picture) told The Malaysian Reserve (TMR).

The company, the largest industry player in Malaysia, has extensive policies, procedures and controls to spot and prevent criminal activities, as well as leading technology and processes for monitoring transactions, she added.

In fact, with rising costs, parent Western Union Co, which is the world’s largest money transfer company, had reported a drop in profits in the fourth-quarter mainly due to high costs linked to tightened regulations to prevent money laundering.

Western Union spends more than US$100 million (RM322.27 million) annually on anti-money laundering and other compliance efforts, according to an estimate.

Despite that, Western Union is facing a probe by the Federal Trade Commission and a US district court over fraud-induced money transfers, an indication as to how big the problem of money laundering remains globally.

It may be noted that despite the issue of illicit money being transferred out of the country having flared up in the past, Malaysia has no official estimates to reveal the quantum that finds its way outside the country annually and through illegal channels.

While the existence of illegal money taking off from the country cannot be denied, Malaysia has in the past affirmed that US$150 billion of illicit money have flown out of the country in the 10 years from 2002-2012, though not saying anything about the mode of transfer, mostly illegal, for such transfers.

This was a response to a report from Global Financial Integrity which estimated US$370 billion (RM1.2 trillion at that time) of illicit capital flight from the country from 2002-2012.

The Malaysian Association of Money Services Business (MAMSB) president Ramasamy K Veeran said: “We (money services businesses) are providing such competitive rates to the service users that it does not make sense to use illegal means to transfer money.”

“There is no major threat to our business from these illegal channels,” he said, adding that the industry might take off in the future due to increasing numbers of tourists and foreign workers coming to the country.

According to BNM’s annual report for 2013, the outward remittances through legal channels like banks and licensed money services firms in 2013 grew by 27% to RM25.1 billion from the RM19.7 billion recorded in 2012. Of this amount, remittance agents accounted for only about RM1 billion involving 1.1 million transactions.

Giving an industry perspective, Chew said in encouraging consumers to make use of legal remittance channels, one must first and foremost do the job right — to attract them with convenient, fast, secure, costeffective services.

In 2013, the number of licensed entities were reduced to 474 from 515 in 2012 as a result of consolidation in the industry and the surrender of licences by smaller entities, a move taken up by BNM.

“There will be further consolidation but we do not have a target for the final number. It will depend on the demand from the market and the review results of the agencies,” a BNM official told TMR earlier.

 

Source: The Malaysian Reserve

Crypto-currency: Lakota Nation set to launch Mazacoin

A brand new crypto-kid on the block, Mazacoin, is set to launch on 22 February 2014. Unlike bitcoin, litecoin and other crypto-Children Dancers on the Wind River Indian Reservation, Wyomingcurrencies, Mazacoin is billed as the official currency of the Traditional Lakota Nation, a native American community on the Pine Ridge Reservation in South Dakota, US. The Lakota are part of the Sioux First Nation of America and Pine Ridge is reputedly the poorest of all reservations in the US. High unemployment rates bring alcoholism, high mortality rates, depression and a host of other social problems. According to sources, there are no banks within the reservation and much of the USD80m given annually in federal funding, is spent in shops and businesses just across the border in Nebraska, bringing no economic benefit to the Lakota Nation.

With the introduction of Mazacoin, the Lakota Nation will move away from dependency on fiat currency, the US dollar in this case, and begin to generate its own wealth and trade based upon Mazacoins.  This is a great experiment which should bring about financial inclusion, one of the G20’s principles.

Read more about the project here

Crypto-coin use and security

Naturally, the financial services community is cautious about the operating platforms for crypto-currencies in their present state.

Mazacoin is billed as “an all new fork of the ZetaCoin project that branched from BitCoin.” Zetacoin itself is an open source crypto-currency based on the bitcoin protocol. Although the  bitcoin community is working constantly to maintain security, there have been some glitches lately which have raised alarm bells for observers.

Two bitcoin related platforms were hacked recently, by a group sending mutated lines of code into the program which runs bitcoin. Although the hackers were unable to steal bitcoin, they did manage to suspend transactions  –  via a series of “denial of service attacks” – designed to disrupt the currency.

Bitcoin companies, as witnessed at a recent round of bitcoin conferences, are implementing compliance with financial services regulations as a pillar of their business from the outset. Compliance officers at crypto-currency firms are meeting with regulators and complying with the rules in the US and this should reassure the rest of the financial services compliance community, at least partly, about the integrity of crypto-currency operators who are trying to break into the mainstream.

Reputation and the bitcoin revolution

The recent arrest of former Bitcoin Foundation President Charlie Shrem on money laundering charges has done nothing to clean FCA - ShremBitinstantup crypto-currencies’ image in the eyes of the cautious regulated financial sector. Shrem is under house arrest in Brooklyn, NY, facing charges of conspiring to commit money laundering, and operating an unlicensed money transmitting business, failing to complete a suspicious transaction report. The charges relate to a USD1m exchange of bitcoins for use on the now defunct Silk Road on-line marketplace, used widely to buy and sell narcotics and other goods.

He has not commented on his arrest and instead is focusing attention back onto bitcoin and awareness of the currency. According to Shrem, it doesn’t matter if people understand how bitcoin works in order for it to become effective: “You don’t know how every nut and bolt works on a car, but you can still drive,” he told the press.

While some non-banking operations are carefully making enquiries into how they could integrate crypto-currency into payment systems, others are acutely aware of the pitfalls and reputational damage which could arise if, for example, a hacker breaks into a customer account and steals crypto-currency. At the moment, there is no legal recourse. As one industry insider mentioned, law enforcement is at a loss to pursue the theft of crypto-currency.

Fans of bitcoin and other crypto-currency are eagerly awaiting what new developments will happen in 2014. The planned launch of two new crypto-currencies in Iceland and in the Traditional Lakota Nation should provide observers with the opportunity to see how crypto works in a controlled environment. Although bitcoin is not intended to be used within the physical borders of one jurisdiction, the Auroracoin and Mazacoin economies could generate discussion on how bitcoin and other border-less crypto-currency can be used and monitored for AML/CTF purposes in the future. Furthermore, the New York Department of Financial Services is observing and learning from bitcoin operations and has announced plans to launch regulation in 2014.

Compliance officers – what do you think? Please comment either publicly or privately. I am interested to hear your opinions.

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Hong Kong: Tighter borrowing rules could lead to financial exclusion

Tighter supervision of banks’ personal lending business by the Hong Kong Monetary Authority could FCA - loansharkforce borrowers to turn increasingly to shadow banking to finance their projects, raising the risk profile in the sector.

The authority placed new requirements on risk management for personal lending in January and ordered banks to bring existing policies in line with the guidelines by the end of March.

Such requirements include applying a stress test on each bank’s entire personal loan portfolio, including a scenario where interest rates for personal loans went up 3 percentage points and banks would stop offering long-term personal loans.

“Some of the personal loan borrowers would be declined by the banks [under the HKMA’s enhanced requirements],” said Mickey Tang, head of banking product development & marketing at Dah Sing Bank.

“When they cannot borrow money from the banking sector, they might turn to money lenders for loans.”

“When there are limitations on formal lending business from the banking sector, a shadow banking problem will then arise,” said Raymond Yeung Yue-ting, senior economist at ANZ Banking in Hong Kong. “That is what happened on mainland China.”

On the mainland, property developers and metal companies faced borrowing restrictions due to government policies. They then turned to non-regulated financial firms – the shadow banking sector – for financing.

Total outstanding loans by money lenders are forecast to be as high as HK$33 billion, according to ANZ.

Sin Kwok-lam, chairman of the local money lender First Credit Finance said he expected to see an increase of 20 per cent to 30 per cent on loan demand when the authority implements the new rules.

Money lenders in the city are under police jurisdiction, but are not under the HKMA.

Sin said he did not expect his sector’s lending to create a systemic risk in the city.

“Most of the money from money lenders came from the shareholders of the firms, rather than from banks. Even if the borrowers can’t pay back, or the shareholders have no money to lend out, only a small group of people will be affected,” he said.

The HKMA said the personal loan business of banks reached HK$343 billion by the end of September 2013 from HK$209 billion in December 2007, when quantitative easing began. Figures from the last quarter of last year were not yet available, it said.

Yeung said low interest rates spurred the growth of the personal loan business, but he feels further growth may start to slow as interest rates rise.

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Biometric ID for one third of Indians – end of KYC woes?

200 px

200 px (Photo credit: Wikipedia)

The problem with India, they used to say, is the sheer number of people who live there, who have no identity, no fixed abode, no surname, some people don’t even know their own date of birth. Banks faced great challenges when carrying out customer due diligence and the result was often the refusal of products and services to potential clients.

But this may be about to change. The second most populous nation on the planet with perhaps the most fluid and undocumented mass of people living in it has defied the odds on organisation and has successfully issued ID cards to 400m Indian citizens. Now that’s 400m out of 1.2bn, one third of the population. According to the Unique Identification Authority of India (UIDAI), the government department behind the scheme, there are 100m more applications being processed and by 2014, every second Indian citizen will be in possession of a unique identifying number which can be verified on a national database.

Aadhaar, the name given to the unique identifying program (UID), is a 12 digit code which serves as proof of an individual’s identity and address. The Aadhaar number given to an individual is valid for life and is authenticated by biometirc and demographic information which will be held on the Aadhaar database. An ID could be verified by using  one time password sent to the user’s phone or via iris/fingerprint matching. Full details of the process, how it might work, the benefit and proposed security measures are on the UIDAI’s website.

This is good news for banks in India, who must follow the government issued ‘Know Your Customer’ rules and with varying degrees of success. Some KYC processes in place are overly onerous, place no trust in the individual collecting the information and often cause a duplication of efforts. When I banked with Citi in New Delhi, my signature was witnessed by a member of the bank’s staff and re-verified by a special signature checking department who gave the final ‘yay’ or ‘nay’ to transactions. All records and documents were bundled off to a storage center in Chennai, and irretrievable by customer facing staff.  So, customers have to go through lengthy and unnecessary form filling processes for certain transactions, even if they are repeated and the bank already has the required information. The Aadhaar number will surely decrease some of this burden for Indian citizens, if not for us pesky foreigners.

Finally, the Aadhaar is really good news for any new payment products and services which are targeting India’s vast non-wealthy population with prepaid debit cards and mobile money accounts in a bid to include the ‘unbanked’ and ‘unidentified’ masses in the financial system. One of the biggest risks of issuing prepaid financial instruments or m-payment accounts is the unintended use which can stem from multiple accounts being controlled by one person. If a drug dealer, for example, controls several m-payment accounts, he will be able to circumvent the transaction limits put in place to stop, or at least hinder,  financial crime.

Under India’s UID scheme, no one should be able to access more products or services than intended by they provider. In theory, if a woman in rural Bihar registers for a prepaid card account, her fingerprint will be recorded on the national database. When the provider carries out KYC, the Aadhaar database should tell them whether or not she has an account already.

Of course, like any transaction and ID monitoring system, Aadhaar will only be as good as the information provided, and the authentication system will need to be extremely robust to withstand a large amount of interrogations by different users. Nandan Nilekani, the founder of Infosys, is the head of the UID project – possibly the world’s biggest biometric ID scheme – and many put its success down to him. As proof of his popularity, he is being courted by the ruling Congress party, led by the Italian Sonia Ghandi and her son Rahul, who is the great-grandson of Jawaharlal Nehru, India’s first prime-minister.

As 400m Indians are already registered with the system since its launch in a tribal village in September 2010, a few weeks before the New Delhi Commonwealth Games. Unlike the CWG, the Aadhaar program has taken off and left its Indian and international critics wanting. Maybe 12 months from now, we will see a greater penetration of non-banking payment products and services and an increase in bank account use across India. Maybe the unique identifying number has cracked the financial inclusion conundrum for the world’s second largest population.