The Central Bank of Kenya (CBK) is raising the alarm over soaring fraud risks tied to remote customer registration in the booming mobile money industry.
Addressing concerns in a recently released circular, the regulator urges mobile money service providers (MMSPs) and banks to bolster their anti-money laundering and counter-terrorism financing (AML/CFT) protocols to mitigate the dangers of virtual onboarding.
“Virtual onboarding methods used by mobile money platforms have become vulnerable to fraudsters exploiting forged documents and identity theft,” warns Gerald Nyaoma, CBK’s Director of Bank Supervision, in the circular. “This weakness stems from the lack of proper customer identification and verification during remote registration. MMSPs must prioritise addressing this critical gap immediately.”
While the circular was issued in November, it only came to light this week, highlighting the urgency of the CBK’s message.
Safaricom, Airtel, and Telkom Kenya, the titans of Kenya’s mobile money landscape, are all targeted by the directive, as their reliance on remote onboarding practices creates fertile ground for fraudulent activity. The CBK’s concerns are well-founded. With digital transactions soaring across Kenya, remote onboarding offers convenience but also opens doors for criminal elements. By bypassing physical verification during registration, fraudsters can easily infiltrate the system and exploit it for illicit purposes, posing a significant threat to consumers and financial stability.
