Can Zambia Ever Achieve a Unified KYC?

A unified KYC is a database linking information on each unique individual within that country’s ecosystem. KYC (Know Your Customer Compliance) is one of the most important essential requirements for financial institutions when determining the validity and risk exposure a client or potential client may pose.

The objective of a unified KYC is to digitise and unify this data to allow the relevant authorities to discover patterns of fraudulent activity and identify the perpetrators of this behaviour. Recently with an uptake in cyber-crimes in Zambia, the need for such a system has become more apparent.

Despite consistencies in the KYC requirements between various companies and sectors, information is largely considered difficult to determine. This perpetually leaves our industries exposed to similar attacks across different networks.

Currently there is a potential issue of server localisation. Due to some specific provisions in the Data Protection Act (2021) and the Cyber Crimes Act (2020) there is increasing pressure on banks to localise the servers on which they store client data.

In South Africa the banks were able to prevent the unification of centralised databases. This has kept KYC largely within their control and institutions enhanced their offerings to include more expansive data collection to fill this gap.

The Indian application of the national unified provides both a promising and cautionary tale when implementing a unified KYC. In 2009 there was no notable method of national identity in the country but following the introduction to India’s Aadhaar system, over 1.3 billion people have been enrolled.

The implementation of the system helped reduce the average clearing time at the Kivu border with Congo (45,000 people passing per day) from 4-5 hours to 30 seconds. This system has been attributed with vastly reduced the cost of accessing credit scores.

In 2019 it was deemed by the Indian supreme court that such a system could not demand that each user attach their bank account but the system itself was legal and was beneficial to the Indian people.

There is no easy path to the conversation of digitised KYC but there is also no avoiding it. The majority of medium income developing countries are either in the process or have completed citizen digitization and we therefore risk falling behind. Zambia must carefully navigate data protection concerns while building a system that serves its people.