BoU mandates national ID use in mobile money withdrawals

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Mobile Money transaction

Kampala, Uganda | By Michael Wandati | The Bank of Uganda has issued a directive requiring mobile money agents to verify customers’ identities using valid National Identity Cards for withdrawals exceeding one million shillings, sparking diverse reactions.

While some view the move positively as a means to combat cybercrime, experts express concerns about potential challenges in identity verification.

Effective immediately, the central bank’s new regulations mandate that customers conducting transactions over one million shillings must present valid National Identity Cards to mobile money agents.

This shift in policy is a response to the increasing occurrences of online fraud and cybercrime on mobile money platforms.

In recent years, the Bank of Uganda has witnessed a rise in mobile money-related scams and fraudulent activities.

To address these issues, the new regulation aims to close loopholes and ensure more secure transactions.

However, cybersecurity expert Emmanuel Chagara warns about the risks associated with relying solely on National Identity Cards for verification.

“While the central bank believes this will be a significant step in combating online frauds and scams, there’s a risk of forgery with National Identity Cards,” Chagara cautioned.

He stressed that the effectiveness of the regulations depends on the thoroughness of ID checks and the reliability of the national identification system.

The Bank of Uganda’s 2020 Financial Capability Survey revealed that only 20% of Ugandans save money in deposit-taking financial institutions, with 15% using mobile money for savings.

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Additionally, 45% of Ugandans rely on Village Savings and Loans Associations, while another 45% use home savings boxes, underscoring the importance of regulating mobile money.

Chagara also highlighted the cost-saving benefits of digital payments compared to traditional methods but emphasized the need to address the risk of ID forgery for the policy’s success.

As the new regulations are implemented, close monitoring by the central bank and stakeholders will be essential to ensure a balance between enhancing security and maintaining accessibility for Ugandans who depend on mobile money for financial transactions.