Regional Framework for Electronic Know Your Customer (e-KYC) and Electronic Identity (E-ID)

The East Africa Payments Council (ECAPI) has established a regional framework to guide the development of robust e-KYC and E-ID systems in East African countries. This framework outlines essential principles to ensure the effective implementation of digital identity and electronic know your customer services.

Guiding Principles for Building Robust e-KYC and E-ID Systems

Establishing Institutional and Governance Structures

Regulators must establish independent, transparent, and accountable institutional structures governing AML-CFT, digital identity, e-KYC, data protection, and financial inclusion. The institutional arrangements for the identity authority can be a system administrator or an agency within the existing ministry or a statutory authority governed by a separate board.

• Key Points:
  • Regulators must build independent, transparent, and accountable institutional structures.
  • Institutional arrangements for the identity authority can be a system administrator or an agency within the existing ministry or a statutory authority governed by a separate board.

Developing Clear Data Protection Policies

Regulators must develop clear data protection policies that include:

• Mandatory consent from the data fiduciary for the processing of personal data
• Details of scenarios where consent would not be required (e.g., court order)
• Special provisions for children and vulnerable groups
• Access to third parties, data localization, and policy on cross-border data transfer
• Privacy by design principles extended to data fiduciaries
• Classification of sensitive data
• Penalties for mishandling of data

Building Economic Cost Structures

Authorities need to build economic cost structures for KYC services to ensure the cost of compliance for stakeholders is viable.

• Key Points:
  • Authorities must build economic cost structures for KYC services.
  • The cost of compliance for stakeholders must be viable.

Establishing Institutional and Governance Structures and Ensuring Cooperation

Regulators need to promote regulatory coordination among different entities managing digital ID and e-KYC systems. The institutional structure needs to be financially autonomous, with independent budgets, to avoid conflicts of interest.

• Key Points:
  • Regulators must promote regulatory coordination among different entities.
  • Institutional structure should be financially autonomous with independent budgets.

Building Technology for Identification Systems

Regulators can ensure that the technology used to develop the identity system is robust, has relevant capabilities, and is customizable. Key features such as deduplication, fraud detection processes, and privacy by design should be embedded in the technology infrastructure.

• Key Points:
  • Regulators must ensure that technology used is robust, has relevant capabilities, and is customizable.
  • Technology infrastructure should have key features like deduplication, fraud detection, and privacy by design.

Conclusion

The regional framework aims to promote the development of robust e-KYC and E-ID systems in East African countries. These systems will help reduce financial crime, enhance data protection, and improve the overall efficiency of financial services. By implementing these guiding principles, East African countries can build a secure and efficient digital identity infrastructure that benefits both citizens and businesses.