Financial Crime World

Turkmenistan Banking Regulations 2020: A Mixed Bag of Progress and Challenges

Introduction

The banking landscape in Turkmenistan has undergone significant developments in recent years. This article provides an overview of the current state of the country’s financial sector, highlighting both progress and challenges.

Key Developments

Increased Access to Financial Services

  • The number of Automated Teller Machines (ATMs) per 100,000 people stands at 1.4.
  • Registered agents for mobile money services have increased to 0.6 per 100,000 people.
  • Mobile money adoption has seen significant growth, with 22% of respondents using mobile money services in the past year.

Regulatory Framework

  • Remote account opening through electronic know-your-customer (e-KYC) is allowed.
  • The supervision structure and legal framework for financial institutions are still evolving.
  • Electronic money regulations govern the issuance of e-money by financial institutions.

Challenges Ahead

High Unbanked Rate

  • An estimated 75% of the adult population remains unbanked.

Limited Digital Payments Options

  • Cash-based transactions dominate the payments infrastructure.
  • The country faces significant challenges in promoting digital transformation and increasing financial inclusion.

Gender Gap and Urban-Rural Divide

  • Women are less likely to own accounts and use digital payment methods than men.
  • Rural areas experience limited access to financial services, exacerbating the urban-rural gap.

Progress Towards Digital Transformation

Innovation Initiatives

  • The Innovation Facilitators’ framework is still developing.
  • Regulator Accelerators and Sandboxes are being explored to foster a more enabling environment for fintech growth.

Savings and Government Transfers

  • 22% of adults reported saving at a financial institution or through mobile money in the past year.
  • Government transfers are increasingly being received directly into accounts, with 30% of recipients reporting receiving these payments digitally.

Conclusion

Turkmenistan’s banking sector has made progress in increasing access to financial services and promoting innovation. However, significant challenges remain, including a high unbanked rate, limited digital payments options, and a persistent gender gap and urban-rural divide. Addressing these challenges will be crucial for the country’s continued economic growth and development.