Bank of Uganda’s ID verification mandate sparks controversy amid resistance. The Bank of Uganda (BoU), the apex bank of the East African country has now issued a directive that reportedly makes the verification of ID compulsory for all digital transactions that amount to or exceed Ugx 1 million ($260).
Bank of Uganda’s ID Verification Mandate
In a bid to combat rising cases of online fraud and scams, the Bank of Uganda (BoU) has issued a new directive requiring users to provide government-issued ID cards for transactions exceeding a specified limit. While aimed at enhancing security, the mandate has sparked controversy and raised concerns among critics.
The central bank attributes the need for this directive to the escalating use of mobile money platforms for fraudulent activities. By implementing ID verification, BoU aims to mitigate risks associated with financial transactions conducted through these platforms.
Challenges and Criticisms
Critics argue that the directive may pose challenges, particularly for Ugandans without valid ID cards. This could potentially slow down business operations and hinder financial inclusion efforts in the country. Moreover, there are concerns that the regulation might inadvertently fuel the market for forged ID cards.
Confirmation and Regulatory Compliance
The directive was officially confirmed by the Bank of Uganda in response to reports from Ugandan news outlets. It aligns with relevant regulatory frameworks, including Section 55(1)b of the National Payments Systems Act, 2020, and Regulation 7 (h) of the National Payment Systems (Agents) Regulations, 2021.
Directive Details
According to the BoU directive, individuals must verify their identity using a valid national ID card or passport for transactions exceeding Ugx. 1,000,000. This verification process applies to transactions conducted at authorized agent locations and operator centers on digital financial service platforms.
Foreigner Verification Process
Foreign nationals seeking to conduct transactions within the specified limits can utilize alternative forms of identification, such as refugee ID/attestation letters or alien IDs. This ensures that individuals without Ugandan citizenship can still comply with the regulatory requirements.
Response from National Identification Authority
The Ugandan National Identification and Registration Authority (NIRA) has announced plans to enhance ID security by introducing iris biometrics to national ID cards. Enrollment for these new IDs is scheduled to commence on June 1, 2024, and will be valid for ten years.
Conclusion
While the Bank of Uganda’s ID verification mandate aims to bolster security within the mobile money ecosystem, it has generated mixed reactions from stakeholders. As the directive takes effect, stakeholders will closely monitor its impact on financial transactions and overall security measures in Uganda.
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