Rise in Mobile Money Fraud: Uganda Orders ID Verification For Digital Financial Transactions of $260 And Above
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The Bank of Uganda has reportedly ordered a compulsory ID Verification for all digital financial transactions of one million Ugandan shilling ($260) and above.
This directive is coming due to the reported surge in digital payments fraud and scams, which forced the BoU to compel authorized operators to comply with certain regulatory requirements.
The Bank of Uganda Wrote on X,
“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)”.
Reports reveal that while the move has been appreciated by some citizens as one of the ways of curbing the increasing rate of digital money fraud, others fear it would open up a window for new problems especially for those who do not have any of those 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 noted that the effectiveness of the new regulations would depend on the rigor of ID checks and the reliability of the national identification system. However, he emphasized the importance of addressing the risk of ID forgery to ensure the success of the central bank’s new policy.
