HIGH-LEVEL RECOMMENDATIONS

Based on our analysis and synthesis of the three countries and a study of the global landscape, we have framed the following high-level recommendations that are intended to help both developed and developing country financial policymakers and regulators leverage digital ID and e-KYC to improve FDP access to and usage of formal financial services.

TAKE DELIBERATE STEPS TO COORDINATE with key line ministries to include FDPs in the national digital ID system while adhering to the principles of identification for sustainable development and international AML/CFT standards. This will help provide an enabling environment for digital identification and financial inclusion of FDPs. Digital ID systems should promote both financial inclusion and data privacy, while offering multifactor authentication mechanisms that have high levels of assurance.

COLLABORATE WITH RELEVANT LINE MINISTRIES to ensure that FDPs have verified means to access KYC documents from different government agencies and departments easily and transparently. This is particularly important when countries decide to change KYC regulations.

DEVELOP APPROPRIATE POLICIES AND REGULATIONS to provide recognition to FDPs and an effective national strategy to increase the digital, financial, and economic inclusion of FDPs. This includes national AML/CFT policies and regulations that are formulated based on the risk-based approach and national or sectoral risk assessments that cover FDPs. CONDUCT AN ASSESSMENT OR DIAGNOSTIC of the status of digital financial inclusion among FDPs to understand their digital financial inclusion needs and underlying challenges preventing that end. This assessment should be conducted in close partnership with the national statistics office, relevant line ministries, and humanitarian agencies such as UNHCR. This may help FSPs in the host country create financial products and services that are aligned with the digital readiness of the financial sector as well as the digital financial literacy of FDPs.

TAKE INTO ACCOUNT THE IMPERATIVE to ensure FDPs’ economic inclusion and integration with their host communities, which remains an integral part of successful financial inclusion. Allowing FDPs access to the labor market will go a long way in enhancing their integration with and acceptance by host communities.153

CO-DESIGN DIGITAL FINANCIAL LITERACY PROGRAMS with humanitarian organizations and FDPs themselves towards empowering FDPs to understand the potential data privacy implications arising out of accessing and using digital financial services. FDPs should also be informed about data sharing mechanisms between the host country, UNHCR and other stakeholders.

IN ADDITION TO THE DATA PROTECTION LAWS AND GUIDELINES, CONDUCT A DATA PRIVACY RISK ASSESSMENT at regular intervals of the development and implementation of the digital ID system and e-KYC framework, and their potential financial inclusion use cases to understand the data protection and privacy implications for FDPs. This could help greatly in proactively plugging the gaps in the data privacy and broader humanitarian protection of FDPs. There is value in proactively ensuring “privacy by design” for FDPs while providing them with digital ID.