Bank agents : risk management, mitigation, and supervision

Abstract

The use of bank agents has the potential to significantly increase financial access by poor and underserved populations to a range of formal financial services, including savings, payments and transfers, and insurance. In particular, agents who may be individuals, small retail shops, post offices, or large retailers can offer customers a convenient and affordable opportunity to cash-in and cash-out of an electronic payments system. This focus note uses the term 'agent' to refer to any third party acting on behalf of a bank (or other principal), whether pursuant to an agency agreement, service agreement, or other similar arrangement. In most countries, a principal is liable under law for the actions of its agents, whether such actions are explicitly or implicitly authorized. Liability for the actions of a non agent acting on behalf of the bank may be different and will often depend on the contractual agreement. However, a bank's liability (whether by law or contract) for third-party actors will likely impact the bank's policies and procedures, which will in turn impact the supervisor's oversight of the Bank.