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Amid a surge in digital payments fraud and scams, the Bank of Uganda has issued a directive mandating compulsory ID verification for all digital financial transactions amounting to one million Ugandan shillings ($260) and above.
Citing concerns over cybercrime targeting mobile money platforms, the Bank of Uganda emphasized the need for enhanced regulatory measures to mitigate fraudulent activities facilitated through digital financial services.
In accordance with Section 55(1)b of the National Payments Systems Act, 2020, and Regulation 7 (h) of the National Payment Systems (Agents) Regulations, 2021, the directive requires authorized agent locations and operator centers to verify the identity of individuals conducting transactions of Ugx. 1,000,000 or more. Valid identification documents accepted for verification include national IDs for Ugandans, passports, refugee IDs or attestation letters, and alien IDs for foreigners.
While some citizens welcome the initiative as a crucial step in combating digital money fraud, others express concerns regarding potential challenges for individuals lacking government-issued identity documents.
Emmanuel Chagara, a cybersecurity expert, highlights the importance of addressing the risk of forgery associated with relying solely on national identity cards for verification. He underscores the need for stringent ID checks and the reliability of the national identification system to ensure the effectiveness of the new regulations.
The implementation of ID verification for high-value digital transactions reflects the Bank of Uganda’s commitment to safeguarding the integrity of the digital financial ecosystem and protecting consumers from fraudulent activities. However, ongoing vigilance and measures to address potential loopholes in the verification process will be essential in upholding the security and trustworthiness of digital financial transactions in Uganda.
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