Regulation or Exclusion? The KYC Dilemma Faces Sierra Leone’s Mobile Money Users
By Musa Paul Feika
As Sierra Leone tightens financial regulations, a new dilemma is emerging at the crossroads of inclusion and compliance. The Bank of Sierra Leone’s directive for full Know Your Customer (KYC) verification seeks to strengthen oversight and curb fraud in the country’s rapidly expanding mobile money sector.
However, for many rural and low-income citizens, the new rules threaten to turn a tool of financial empowerment into one of exclusion, raising pressing questions about how to balance regulation with accessibility in the drive toward a more formalized digital economy.
The Bank of Sierra Leone. (BSL) introduced “Know Your Customer” (KYC) requirements in 2012, following the enactment of the Anti-Money Laundering and Combating of Financing of Terrorism Act.
This legislation mandated that financial institutions implement KYC and other verification checks for customers.
Recently, a new directive issued on July 16, 2025, mandated the onboarding of fully KYC-compliant accounts onto the Instant Payment Service (IPS) platform by commercial banks and mobile money operators.
The Bank of Sierra Leone (BSL) has directed all mobile money operators and payment service providers to fully implement KYC verification, requiring users to present valid national identification and other personal documents to continue using their accounts.
Officials say the move is necessary to strengthen consumer protection, curb fraud, and enhance compliance with anti-money laundering laws.
But for thousands of Sierra Leoneans living in rural and hard-to-reach communities, the new rules pose daunting challenges. Limited access to identification documents, poor connectivity, and the absence of registration points have left many worried they could soon be excluded from the formal financial system altogether.
In the small village of Yiraya, Koinadugu District, 54-year-old farmer Hawa Kamara relies on mobile money to receive payments from traders in Kabala and support from her son working in Freetown. But, with the new KYC directive, she fears being cut off.
“I don’t have a national ID, and to get one I would have to travel to Kabala. The transport alone costs more than what I make in a week. If they stop people like me from using mobile money, how do they expect us to survive?”she asked.
Hawa’s story mirrors that of many across Sierra Leone’s vast rural regions.
According to the National Civil Registration Authority (NCRA), over one million adults mostly in remote districts still lack national identification cards. Many of them depend heavily on mobile money for remittances, business transactions, and everyday purchases.
In Bonthe District, fisherman Mohamed Koroma said the process feels unfair.
“We use mobile money to sell our fish to people in Bo and Freetown. If they say you must have ID, what about people in the riverine areas where there is no NCRA office? The system helps the rich, not the poor,”he lamented.
Furthermore, mobile money has been one of Sierra Leone’s biggest financial inclusion success stories. From traders in Koidu to farmers in Kailahun, it has allowed millions to send and receive money instantly without needing a bank account.
According to the Bank of Sierra Leone’s 2024 Financial Stability Report, more than six million mobile money accounts were active nationwide, processing billions of leones in monthly transactions. Nearly 70% of these users live in rural or peri-urban communities.
Experts warned that pushing full KYC too quickly could reverse much of this progress.
“Financial inclusion should not come at the cost of financial exclusion. The central bank’s intentions are good to improve trust and security in the system but implementation must reflect the realities on the ground. Many rural Sierra Leoneans lack IDs, internet access, and the digital literacy required for these processes,” said Dr. Ibrahim Kargbo, a financial inclusion expert and lecturer at the University of Sierra Leone.
Dr. Kargbo recommended a tiered KYC model, similar to systems adopted in Ghana and Kenya, where users can open low value mobile money accounts with basic information while gradually meeting full compliance requirements. “That would ensure that no one is left behind as we move toward a more formalized financial ecosystem,” he said.
For small traders like Adama Conteh, who runs a stall in Tonkolili District, mobile money is more than convenience it’s survival.
“Every week, my sister in Makeni sends me money for goods. Without my mobile account, I would have to travel two hours to collect cash, and sometimes it’s not even safe. If they block my SIM because of ID, it means my business will stop,” she explained.
Sharing their concerns,Mohamed Bangura urged authorities to avoid a one size-fits-all rollout.
“We are not against KYC it’s important for accountability. But the transition should be gradual. The government must deploy mobile registration teams to remote communities, partner with chiefs and women’s groups, and give people time to comply.”
Acknowledging the challenges, officials at the Bank of Sierra Leone (BSL) insisted that they are aware of the difficulties and are working with operators and the NCRA to ease the transition.
A senior BSL official, speaking on condition of anonymity, said the central bank’s goal is not to exclude anyone.
“We understand that rural communities face logistical challenges. That’s why we are engaging stakeholders from the NCRA to mobile operators to make the process as inclusive as possible. Our vision is a secure and inclusive financial ecosystem that benefits all Sierra Leoneans,”,” the official said.
The NCRA says it is expanding outreach programs and mobile registration drives to reach unregistered citizens in remote areas. “We have already deployed teams in districts like Moyamba, Kono, and Port Loko. spokesperson. The goal is to make sure that every Sierra Leonean who wants an ID can get one, regardless of location,”said Keifa Marah from NCRA.
While regulators emphasize compliance and security, economists say inclusion must remain the cornerstone of Sierra Leone’s digital transformation.
“Regulation is necessary, but timing and strategy are everything. If rural users lose access to mobile money, the ripple effects could harm local economies, especially women-led businesses and farmers who rely on remittances,”said Dr. Josephine Tucker, a development economist.
She added that mobile money has played a critical role in reducing poverty, empowering women, and connecting remote markets. “If implemented wisely, KYC can enhance these gains but if handled poorly, it could deepen inequality.”
Bridging the Digital Divide, beyond documentation, digital literacy remains another major hurdle. Majority of older citizens and rural users are unfamiliar with digital procedures or online verification steps.
In Kailahun, 67-year-old pensioner, Pa Sorie Jalloh said he struggles to navigate mobile menus. “My grandson helps me send and receive money. If they say we must register online or fill forms, how can someone like me manage?” he asked.
Digital inclusion advocates argue that education must accompany regulation. “We need to pair the KYC rollout with nationwide financial literacy campaigns. People should understand not just what KYC is, but how to do it safely,” said Fatmata Sesay, a mobile money agent in Bo.
Looking ahead, as Sierra Leone moves toward a fully digital financial ecosystem, policymakers face a delicate balancing act ensuring security and compliance without shutting out the vulnerable.
The success of mobile money in bridging the financial divide has been one of the country’s most significant development achievements over the past decade. But for citizens like Hawa Kamara, that progress feels fragile.
“We depend on mobile money for everything,” she said quietly. If they block us because we don’t have ID, it will be like cutting us off from the world.”
For many like her, the future of financial inclusion in Sierra Leone depends not just on regulations written in Freetown but on whether those rules can truly reach the last mile.
