AfDB Pledges $8m to Launch Interoperable Bank ID System in 4 Countries

AfDB Pledges $8m to Launch Interoperable Bank ID System in 4 Countries!

An initiative to develop a compatible, one-of-a-kind digital ID for banking and a streamlined customer verification process for four West African Monetary Zone (WAMZ) nations is being implemented under the direction of the West African Monetary Institute (WAMI).

This new identity system will support the involved countries' national identity systems and assist in their attempts to improve economic growth.

A news statement states that the $8 million will be provided by the African Development Fund (ADF), the subsidised part of the African Development Bank Group (AfDB), to complete the program in The Gambia, Guinea, Liberia, and Sierra Leone.

The board of the institution approved the funding on March 29.

The central banks of these countries will work together to carry out the plan, which is anticipated to begin in July 2023.

The primary objective of the new bank ID system is to make it possible to connect bank accounts with other financial institutions in an effort to promote economic growth.

The program, which will be created to allow them to conduct KYC checks, and anti-fraud operations, decrease debt payment failures, and foster friendly connections among the companies, will include more than 53 financial institutions.

Furthermore, the program is intended to improve the effectiveness of these countries' financial sectors in order to widen accessibility to credit and advance their economic convergence.

According to WAMI Director General Olorunsola E. Olowofeso, "The success of the Bank Verification Number (BVN) system put in place by the Central Bank of Nigeria served as the seed for the Unique Bank Identification (UBI) and Digital Interoperability project.  The BVN, an 11-digit unique identification for every individual across the Nigerian Banking industry, is linked to all bank accounts and has led to an extreme decline in digital financial scams, non-performing debts, and the eradication of ghost names from the civil service paycheck.

AfDB Director for Financial Sector Development Ahmed Attout praised the initiative as well and emphasised the significance of a safe bank ID network for "expanding banking accessibility and reputation among users as well as overall advancement of the financial industry."

Nigeria to Wipe Up Millions of Bank Accounts with No Bank Identities

Nigeria, the country that served as the model for the impending WAMZ initiative, has declared intentions to close all bank accounts that have not yet been connected to the bank Identity or BVN.

According to the daily newspaper Leadership, these are primarily Tier-1 accounts that are created without much or no evidence.

The risk managing director at the Central Bank of Nigeria, Blaise Ijebor, recently claimed on a board that the CBN has recognised Tier-1 bank accounts as one of the elements that support financial fraud because the majority of them are not connected to the biometric BVN and provide scammers with a convenient point of entry.

The ability of these criminals to take advantage of all possible channels that give them unauthorised access to accounts is another component, adds Leadership. Other variables also include non-compliance regulations by some financial firms, particularly digital banking organisations.

The CBN will start the procedure to close all the unknown accounts, but Ijebor claims the action is part of the financial regulatory procedures to set up a more comprehensive compliance framework.

Between April and July of 2022, about 700,000 BVNs were distributed to bank account customers in Nigeria.

The officials claim that because banking representatives would once again have the authority to supervise account opening and KYC compliance processes for people creating new bank accounts, fraud will be significantly reduced.

Also Read: US Treasury Demands DeFi Compliance With Anti-Money Laundering Regulations

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