Focus Note: The Use of eIDs and eKYC for Customer Identity and Verification in Developing Countries: Progress and Challenges

November 15, 2018
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Increased use of electronic identification (eID) over physical identification is paving the way for adoption of electronic Know Your Customer (eKYC) systems to fulfill customer identification and verification (CIV) obligations. The impact of eKYC can however manifest beyond CIV to other Customer Due Diligence (CDD) processes.

Successful implementation of eKYC while important for Anti Money Laundering (AML) and Countering the Financing of Terrorism (CFT) purposes requires more than just a robust eID and affects SIM card registrations and opening of Digital Financial Services (DFS) accounts and hence financial inclusion.

To highlight this trend, this Note discusses current implementations of eIDs and eKYC and its impact on, access to and provision of DFS. However, with multiple stakeholders in the system, issues of regulatory coordination, technological capacity, and data protection and privacy affect the use of eKYC for financial inclusion.

The eKYC systems that have been launched have as their overriding goals to advance a person’s access to services, reduce identity fraud, and increase financial inclusion. Country examples and challenges – public policy, privacy, harmonization, security, legal, financial and infrastructural - in the rollout are discussed

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