Innovative solutions to Know Your Customer (KYC) regulations in emerging markets

The impact of mobile money in expanding financial inclusion is well-proven, with 272 deployments in 90 countries.  The Global Findex illustrates how mobile money is shaping the payments landscape, with 21 per cent of adults in Sub-Saharan Africa holding a mobile money account.

The ability to conduct Know Your Customer (KYC) efficiently and effectively has been key crucial in expanding access to mobile money. Providers, like all financial institutions, have a responsibility to verify their customers and identify any potential risks they may pose prior to providing services. However, onerous customer identification, verification, and due diligence requirements – collectively referred to as KYC – threaten to inhibit the industry’s ability to reach more customers.

In this context, we are pleased to release a study on innovative KYC solutions for the mobile money sector.This paper identifies the challenges facing providers and invites policymakers to address these issues, including:

1. The lack of a clear regulatory framework;
2. Inflexible KYC requirements;
3. Failure to keep pace with innovation;
4. Lack of automation and digitisation of KYC reporting requirements; and
5. Overlapping regulations.

Read the report

Overly restrictive regulations not only present a risk to the adoption of mobile money, but also to related KYC innovations. The situation is more complex in markets where a large proportion of the population lacks an acceptable form of identification. Lack of proportionality on KYC requirements presents a significant barrier in countries where these requirements are the same as those for prudentially regulated entities, such as banks.

Moreover, countries with more proportional customer identification, verification, and KYC requirements tend to have higher levels of digital financial inclusion as evidenced by the recently published GSMA Mobile Money Regulatory Index.

KYC innovations can make it easier and more affordable for excluded groups, particularly low-income and rural dwellers without conventionally adequate ID, to gain access to financial services, while ensuring compliance with regulatory requirements. In the report, we focus on two approaches to addressing CDD-related impediments to financial inclusion: (i) simplified due diligence (SDD) or tiered KYC, and (ii) electronic KYC (e-KYC).

Finally, we present the necessary policy and regulatory considerations and discuss the potential of these innovations in Sub-Saharan Africa, Latin America and South Asia.

For more information on mobile money and KYC regulations, contact us at

Read the report

This initiative is currently funded by the UK Department for International Development (DFID), and supported by the GSMA and its members.
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