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Identity Thieves Increasingly Targeting Kenya’s National ID

Kenya experienced 7% increase in fraud over the last six months, Smile ID's KYC Report shows

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Smile ID (formerly Smile Identity), the leading identity verification and digital Know Your Customer (KYC) provider in Africa, has unveiled its highly anticipated half-year 2023 KYC Report. Drawing on data from over 75 million KYC checks across diverse industries, the comprehensive report offers valuable insights into the current state of identity verification practices in various African countries.

By shedding light on emerging fraud trends and showcasing how businesses can harness identity verification to safeguard their operations, the report seeks to propel the region’s burgeoning digital economy towards greater financial inclusion and secure digital transactions.

Africa’s digital economy is evolving rapidly, with over 54 countries and a population of 1.4 billion inhabitants. However, the World Bank estimates that as of 2020, nearly 500 million Africans still lacked legal identity documentation. This vast potential for identity verification solutions to bridge the identity gap underscores the pivotal role played by identity infrastructure in Africa’s digital economy.

In this regard, Smile ID’s KYC Report assumes critical importance, as it aims to equip businesses, particularly in the fintech and banking sectors, with the tools to mitigate fraud risks and enhance trust in digital transactions.

The half-year 2023 KYC Report shows that Biometric verification is emerging as a powerful tool in combating fraud, reducing fraudulent users by a staggering 50%. Additionally, the report shows that in 2023, face mismatches accounted for 43% of ID frauds, indicating the use of stolen or lost IDs, while 41% of frauds were selfie spoofs.

Biometric checks, therefore, prove to be crucial in identifying fraudsters, as textual verification alone falls short in this regard. Among biometric methods, facial recognition emerges as the preferred and most accessible option worldwide, providing enhanced security for KYC processes.

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While local ID databases remain a robust source of truth for real-time verification, the report highlights that frequent downtime (averaging 3%) remains a challenge. However, leveraging Document Verification during ID database downtime offers a reliable solution, facilitating onboarding processes and enabling businesses to expand into multiple markets with a single integration.

The report also shows that the adoption of digital identity is gaining momentum across Africa, with several countries making notable strides. Ethiopia’s enrolment for the foundational Fayda ID, Kenya’s forthcoming Unique Personal Identifier to replace Huduma Namba, and Uganda’s plans to launch a new digital ID scheme in Q4 2023 signify a growing commitment to leveraging digital identities for enhanced services.

Gender Inclusion in KYC

Although onboarding fraud rates have declined by 5% in focus markets, such as South Africa and Ghana, the report identifies incentive-based acquisition as a factor correlated with increased fraud attempt rates. It’s worth noting that while some regions have witnessed declines in fraud, Kenya experienced a 7% increase in fraud over the last six months, with the National ID being the most attacked.

Additionally, the report brings attention to 11 African countries now on the FATF’s grey list, including South Africa, Cameroon, and Nigeria. This development emphasizes the need for businesses to align their KYC/AML procedures with international best practices, ensuring accountability and trust in Africa’s digital landscape.

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BT Reporter
BT Reporterhttp://www.businesstoday.co.ke
editor [at] businesstoday.co.ke
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