Pan-African digital identity verification company Smile Identity recently released a report called “The 2022 State of KYC in Africa.” Based on approximately 50 million KYC verifications in Africa in 2022, the study found that the fraud rate is up 28 percent from 2021.
As the increasing digitalization of usage leads to a sharp rise in these authentications, the total number of frauds has exploded. Sensitive use cases are particularly concerned, such as banking transactions via mobile terminals.
“While the three-year trend suggests an upward trajectory of fraud, it is interesting to note that the percentage of fraudulent attempts decreased slightly in the second half of 2022,” the report reads.
Smile Identity welcomes the increased use of digital identities linked to biometric data. In Nigeria, 94 million people are already using biometric data as part of the NIN (National Identification Number). Similar programs are being deployed in Uganda and Kenya.
Biometric KYC checks are the most effective at identifying identity theft. On the contrary, according to Smile Identity’s analysis, text-based KYC checks in Africa miss 50% of these fraud attempts.
The report also contains typologies of the most commonly used frauds and techniques to combat them.