As we engage in cash programming we partner with financial institutions more and more to partner with us in the delivery of aid. This has many benefits including various efficiencies, but it also has unintended consequences.
The humanitarian principles are key principles that all humanitarian actors are expected, in some cases required, to adhere to. One of them is the humanitarian principle of Impartiality which requires us to give aid without bias:
Humanitarian action must be carried out on the basis of need alone, giving priority to the most urgent cases of distress and making no distinctions on the basis of nationality, race, gender, religious belief, class or political opinions.
https://www.icrc.org/en/ihl-and-humanitarian-principles
On the other hand, KYC or Know Your Customer is a financial regulation requiring us to know who we are engaging with for a financial transaction.
KYC is the process whereby a business verifies the identity of its clients and assesses their suitability, along with the potential risks of illegal intentions towards the business relationship… [It is a process] of ensuring their proposed customers, agents, consultants, or distributors are anti-bribery compliant, and are actually who they claim to be.
https://en.wikipedia.org/wiki/Know_your_customer
So one principle says to only consider need and the other says know who you are dealing with. On the face of it, there doesn’t seem to be any issues. However, this may change as we dig in.
KYC requires financial institutions to verify that I am who I say I am. In order to do this, they require validated documentation. For example, proof of address from specific type of organisation, government issued identity documents like a passports, national ID card, birth certificates and so on. All fairly standard.
The challenge is when you don’t have those types of documents because you have fled your home due to natural disaster or conflict, or you are refugee, or you have been living in poverty, and so on. The people who tend to need humanitarian aid tend to be the people who are least likely to have the documentation acceptable for completing KYC.
Secondly, as KYC requires us to prove who we are, which comes with the requirement of documentation. Therefore, if aid programmes move to the type of cash and voucher programming which require KYC adherence, then aid is not based on need alone. Are you then excluded, if you have need but do not have the KYC documentation?
It is a fine line. But fine lines are where the subtle and significant shifts happen, unintentionally. Fine lines are where the long term changes slip in.
Considering who it leaves out is a critical step. But also asking if this is a shift we want to make is also critical; make it a conscious choice, not a subtle, unconscious one.
And yes, we’ve collected data about who people are for years and in many projects. That is not the rub. The rub is when it, along with certain types of proof, becomes a requirement, a pre-requisite. And it is all done under the banner of our humanitarian principles.
Hi Amos
Of my ignorance…
Does it mean that the move from in kind assistance, such as food programming,
to cash programming comes with a different set of ID requirements? Are we talking about cash programming in reielf /humanitarian setting or in vases of cash coming in for loans such as in micro-finance? If there is an increase in ID requirements in the former case and local registrations such as refugee or IDP camp registrations do not suffice that becomes problematic. The situation may be different for the later but still locally issued papers and community groups work.
Thanks for your comment Tamrat – it is good to have your voice in this discussion. For me, while I am advocate for using technology to improve how we deliver aid and am a huge fan of cash programming, I wrestle with when we require or demand people trade their data for aid. When we partner with certain financial institutions for delivering cash programming, we must meet KYC requirements. However, when we deliver cash in other ways we don’t need to. When we demand data from people, I want us to think about how this ‘sits’ or ‘fits’ with our humanitarian principles. I want us to think about who it leaves out or how we will still relate to those who it leaves out.
Ideally, I want there to be options, alternatives for those we seek to serve. I want them to be able to choose how to receive their aid and I don’t believe we need most of the personal data we collect. It may also be helpful to read the second part of this piece about cash programming ‘saving’ aid.
I don’t have answers to all this, but know if we discuss and debate it, we will find them together.
Thanks for adding comment; please keep doing so
Hi Amos,
This is a thoughtful and interesting piece. KYC is a crucial part of the intergovernmental international framework for combating crime and terrorism, and it’s incredibly important that it continues to work and to close loopholes rather than opening them!
But naturally, it also tends to marginalise those already at the margins, by making stateless or undocumented people, often those in the most vulnerable and fragile situations, less able to receive aid through traditional banking services.
For me, there is a wider question in this debate on the continuing role of physical cash in society as opposed to electronic credit. But to your point, I would also wonder whether banks and international aid agencies can work together to fulfil KYC requirements through aid relief cards and accounts without the need for fully documenting every single recipient.
Thanks Nikolai – yes, there are benefits to KYC and reasons for it. And yes, there is a role for NGOs, which we have been actively involved in and playing for years, if not decades. I don’t think this is an issue of physical cash versus digital cash or credit. For me, it’s about realising when we are subtly changing our humanitarian principles and beginning to require things from people in exchange for aid.