digital finance, migration

Financial services for refugees and the dilemma of personal ID

As millions of people continue to migrate due to political unrest, climate change or limited economic opportunities, there is an ongoing discussion around how to provide financial services for refugees. The presentations and projects around this topic so far have the tendency to focus on one specific group, i.e. those who reside in refugee camps. As a result, the needs of the rest of the refugee population are not addressed and the discourse often seems disconnected from reality. The panel on digital financial services for refugees organised by the Financial Inclusion Forum UK, however, shed light on an important dilemma, which is the personal identification of refugees.

This panel was composed of a representative of GSMA, International Rescue Committee (IRC), Dinarak and Caribou Digital, who all shared their experiences in providing mobile money and cash transfer services to refugees, as well as, their studies on how to develop an inclusive digital economy. Whilst a bulk of the discussions did revolve around services offered in the refugee camps of Jordan and Kenya, the most interesting debate was on how refugees can get access to these digital financial services. The conversation was cut short, however, Chris Locke of Caribou Digital, for example, highlighted the refugees’ deep concern about sharing their ID with external entities and the use of social media ID for some digital services.

From my perspective, there is, first of all, a need to better define the target group. Who are refugees? Does the particular service or programme aim to serve residents of refugee camps or the wider community of refugees, which include asylum seekers and refugees who obtained the right to reside outside of camps and to travel? Especially coming from the European context of migration flux, which comprises mainly of asylum seekers, I believe this population is most characterised by its mobile nature, which is unattached to any specific location.

Secondly, if it can be agreed that the refugee population includes asylum seekers, then this population’s most salient vulnerability, by far, is their legal status. For example, from the moment a person applies for political asylum until the decision is made, it takes at least a year and a half, otherwise on average three years in Italy. In the meantime, asylum seekers are given temporary residence permits of six months, which take other six to twelve months to renew. The implication of this legal limbo, compounded by increasing levels of structural xenophobia applied by several governments, is that people go through extended periods of no-identity or paralegal status, with which it is hard to access financial services. Others, who obtained refugee status and the right to travel, often choose to migrate to another country to look for better employment opportunities, and spend another period of time without legitimate documentation in the country where she/he resides.

Within such a context, the refugee population find improvised solutions to continue to be financially active. For example, cash-based money transfer services, such as Western Union and Moneygram, are those most in demand. If one does not have a personal ID, a friend with an ID will send or receive cash and the person remains unidentified or tracked. There exists also informal money transfer service providers who have a network in both sending and receiving countries and can charge as much as 10% commission for immediate money transfers. Other real situations include opening a bank account with a false name that the person used to request asylum, out of fear of persecution, to then be obliged to continue transacting from that account, even after correcting her/his name throughout the legal process.

As these examples show, the dilemma of not owning a stable personal ID leads to an extended period of inappropriately or un-tracked financial transactions made by refugees, and in fact, the larger community of migrants. This, of course, has implications regarding the Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures; but the real challenge precisely lies in designing a solution that abides to these procedures without excluding the majority of this population from formal financial services.

I do not have a solution or have I heard of one yet. However, if we acknowledge that refugees and similar categories of migrants at large represent a significant share of global financial transactions and that the final objective is to respond to the need of this population to be financially included and active, then the issue of personal ID must be addressed.


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