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Honduras Strengthens Banking Regulations to Ensure Electronic Transaction Integrity
The Honduran government has taken significant steps to regulate the growing use of digital payments and transfers. In this article, we will explore the new laws and guidelines introduced for companies that provide electronic money services.
Overview of Regulatory Framework
In 2016, the National Banking and Insurance Commission (CNBS) began overseeing companies that provide electronic money services, starting with general regulations for Non-Banking Electronic Money Institutions (INDEL). Since then, a legislative decree was established in 2021 to oversee the organization, operation, and functioning of legal entities providing payment and transfer services. This was followed by two key regulations in 2022: “Regulation for Payment and Transfer Services through Electronic Money” and “Regulation for Services offered by Electronic Payment Service Provider Entities.”
Non-Banking Electronic Money Institutions (INDELs)
INDELs are authorized by the Central Bank of Honduras (BCH) to provide electronic money and offer fund transfers and payment operations. Their services include:
- Activation of electronic wallets
- Conversion of physical currency
- Balance inquiries
- Transaction history
- Sending and receiving national transactions
- Collection services
- Transactions for state institutions
To establish an INDEL, a corporation with a minimum capital of 100,000 Lempiras is required.
Electronic Payment Service Provider Entities (EPSPEs)
EPSPEs are legal entities that offer transfer services without engaging in the activity of converting physical to electronic money. Their services include:
- Payment gateways
- Payments for purchases from affiliated companies
- Payments for public or private services through collection
- National transactions initiated with cash or deposit accounts, digital or mobile electronic wallets, or payment credentials
Requirements for INDELs and EPSPEs
Both INDELs and EPSPEs must comply with provisions that ensure the security and traceability of transactions. This includes:
- Implementation of authentication mechanisms
- Identity verification
- Maintenance of updated records
The regulation imposed by the BCH and CNBS establishes specific requirements for these entities to protect users and prevent potential illicit activities.
Impact on Honduras’ Financial System
The implementation and regulation of INDELs and EPSPEs have significantly contributed to the modernization and efficiency of the financial system in Honduras. This not only provides users with more flexible and convenient options but also establishes essential measures to ensure the safety and transparency of all electronic transactions, thereby consolidating trust in the country’s financial environment.
Conclusion
The Honduran government has taken significant steps to regulate the growing use of digital payments and transfers, introducing new laws and guidelines for companies that provide electronic money services. The regulation imposed by the BCH and CNBS ensures the security and traceability of transactions, protecting users and preventing potential illicit activities. This marks a crucial milestone towards the integrity of the financial system in Honduras.