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The Bank of Uganda’s recent directive requiring government-issued ID documents for all digital financial transactions exceeding one million Ugandan shillings ($260) has spurred backlash from citizens.
Several citizens argue that the move announced this month by the country’s central bank, will pose several challenges and impede business operations, particularly since a significant portion of the population lacks ID cards.
On Aril 19, the BoU announced in a message on its X account that following a surge in digital payments fraud, it was forced to compel authorized operators to comply with certain regulatory requirements.
The message reads,
“The Bank of Uganda observed a rise in the usage of mobile money platforms for online fraud and scams. Mobile money systems have occasionally been the target of cybercrime carried out by agents working with criminals. Therefore, in compliance with Section 55(1)b of the National Payments Systems Act, 2020 and Regulation 7 (h) of the National Payment Systems (Agents) Regulations, 2021, all financial transactions involving Ugx.
“1,000,000 or more that are carried out at authorized agent locations and operator centers on digital financial service platforms must be completed after the holder’s identity has been verified using a valid national ID (for Ugandans), passport, refugee ID/attestation letter, or alien ID (for foreigners).”
While some citizens have welcomed the move as a measure to combat the rising incidence of digital money fraud, reports indicate mixed sentiments. Concerns have been raised that the directive could potentially create new challenges, particularly for individuals without government-issued identity documents.
Despite the apparent benefits, cybersecurity expert Emmanuel Chagara cautions against the potential risks associated with relying heavily on National Identity Cards for verification.
He said,
“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”.
He further noted that the effectiveness of the new regulations would depend on the rigor of ID checks and the reliability of the national identification system.
Emmanuel Ojukwu
