Financial Crime World

Uganda Banks Embrace Electronic Know Your Customer (e-KYC) System to Prevent Fraud

Efforts to Reduce Financial Crimes in Uganda’s Banking Sector

Kampala, Uganda - The Uganda Bankers Association (UBA) has called on banks and other financial institutions in the country to fully adopt the electronic Know Your Customer (e-KYC) system to eliminate or prevent over 90% of fraud from their operations.

What is e-KYC?

The e-KYC system enables commercial banks and other financial institutions regulated by the Bank of Uganda to access the National Identification Database at the National Identification and Registration Authority (NIRA). It uses NIRA’s existing records and the National ID card system to help banks validate the identity of existing and prospective customers.

Benefits of e-KYC

  • Up to 90% security for banking transactions
  • Easy verification of customer identity using thumbprint, National ID Number (NIN), card number, names, and date of birth
  • Seamless remote onboarding of customers into the formal financial system
  • Help lenders make informed decisions about products for their customers based on their financial habits

Current Adoption Rate

25 out of 36 financial institutions supervised by the Bank of Uganda have taken on the e-KYC system, while another eight are in the process of implementing it.

Future Plans and Expansion

The system is not only limited to banking transactions but can also be used in other sectors where identity verification is crucial. The Central Bank will support any idea aimed at strengthening the industry, and the use of e-KYC is expected to contribute more to national development.

Key Quotes

  • “Institutions that have fully implemented the system only require a customer’s thumbprint to verify the identity, authenticate transactions or open an account and update existing customers’ information.” - Wilbrod Owor, UBA CEO
  • “The solution allows for seamless remote onboarding of customers into the formal financial system by verifying their identity using their National ID Number (NIN), card number, names, and date of birth.” - Timothy Musoke, Laboremus CEO

Conclusion

The adoption of e-KYC is expected to boost confidence in the banking industry and eliminate fraud and other losses related to human error. It also aligns with government programs under the National Development Plan (NDP) and the Parish Development Model (PDM), contributing more to national development.