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Understanding Capture and Validate KYC Processes: Global Experiences, Challenges and Learnings

– GSMA

The GSMA investigates the ways mobile network operators can validate cell phone users’ identities and provides learnings for how to best implement future systems

In most countries, consumers must present official proof of identity in order to access cell phone services. While these ‘Know-Your-Customer (KYC)’ regulations exist in at least 150 countries around the world, different countries have different systems underpinning the process.

This report from the GSMA finds that there are three main systems that mobile network operators (MNOs) use in SIM registration. The most common system – used in 85% of eligible countries – is known as ‘Capture and Store’, and involves MNOs simply storing personal information about the SIM user, without proactively doing anything with the data.

A further 4% of countries use ‘Capture and Share’ systems, in which SIM users’ data is proactively shared with the government or regulator. The final 11% of countries use ‘Capture and Validate’ (C&V), which involves MNOs validating users’ ID credentials against a central government database.

In this report, the GSMA finds that C&V is the most effective approach to SIM registration, citing benefits such as increased security and revenue alongside reduced administrative costs for MNOs. GSMA’s in-country research found that C&V processes ensured more streamlined registration, database management, transaction and compliance processes, while maintaining users’ privacy and data protection.

The report notes the potential costs and risks to customer base that accompany increased validation processes. It also highlights the risk to vulnerable populations, who may be excluded from accessing mobile services as a result of C&V. As a result, the report recommends close collaboration with governments, regulators and industry in order to ensure smooth and strategic implementation of the C&V approach.

Finally, the report notes broader opportunities inherent in the C&V approach:

"Capture and Validate systems provide MNOs with unique opportunities to establish digital identities for their customers and provide access to new mobile services that generate both commercial and social impact… MNO representatives participating in our research saw value in working with the GSMA to champion the development of new identity-linked services, or to help to address the barriers that prevent millions of individuals from accessing official proof of identity and registering for mobile services in their own name."

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