Uganda financial institutions sign on for digital KYC through national ID

Uganda’s central bank, known officially as the Bank of Uganda (BoU), says up to 74 financial institutions now have access to the database of the National Identification and Registration Authority (NIRA) for purposes of digital Know Your Customer (KYC) verification.

These detailed are contained in the BoU 2023 annual report.

There were 74 financial institutions with access to the NIRA database listed by the Bank, as of June, including commercial banks, microfinance institutions, a forex bureau, financial technology companies, insurance companies and one telecommunications company. Some of them are at full operation while others are still at the trial phase, according to the report.

The Bank notes that the move by these institutions is in line with the enforcement of a provision of the Registration of Persons Act 2015 which states that a national ID card or a national identification number shall be required to access certain services such as financial services. The implementation of the provision has been on since 2020.

Accessing the NIRA database is vital for these companies, enabling them to easily complete KYC checks by verifying and authenticating people’s identity using data held by the national ID authority.

The BoU posits that complying with the digital KYC provisions not only enables secure and seamless access to financial services, but also drives financial inclusion in the country.

As part of measures to enhance security of financial transactions and combat financial fraud, the BoU issued a directive in April requiring ID verification for all financial transactions of one million Ugandan shilling (US$260) and above. The move was met with criticism as some citizens said it would slow down business.

Coordination between national ID systems and the financial sector appears to be a growing trend.

A similar partnership was formed between banking and ID authorities in nearby Somalia just months ago.

NIRA Director General Abdiwali Tima’adde credited the World Bank with supporting the implementation of Somalia’s national ID system, The Standard reports. World Bank Country Manager Kristina Svensson noted that 85 percent of Somalis do not have a legal ID, limiting their financial opportunities.

The government is currently sorting out the role that the biometric national ID card will play in Somalia’s National Transformation Plan, says Deputy Prime Minister Salah Ahmed Jama, and the banking implementation will play a key role in integrating the country’s economy with the global financial system.

A Tax Identification Number linked to the national ID will also be launched to streamline the country’s taxation system, Deputy Minister of Finance Abdiqafar Elmi Hange announced.

Article Topics

Africa  |  banking  |  fraud prevention  |  identity verification  |  KYC  |  national ID  |  National Identification and Registration Authority of Uganda (NIRA)  |  Uganda