On the occasion of the Arab Financial Inclusion Day 2020, the Arab Monetary Fund, AMF, announced the publication on Digital Identity and e-KYC Guidelines for the Arab Region issued by the Arab Regional Fintech Working Group. This document aims to contribute to the existing dialogue at the regional and global levels on the importance of digital identity, ID, and electronic know your customer, e-KYC, and Customer Due Diligence, CDD, and their impact on financial inclusion and the further steps going forward. This year, the Arab Financial Inclusion Day, which is celebrated April 27, is held under the theme of "Towards Building Financial Literacy that promotes Financial Inclusion".Inadequate access to financial services is a problem facing a significant portion of the population across the world and the region. This can be alleviated via the transformation to digital financial services and the digital access to financial services. Given this fact, the Arab region's financial services industry and policymakers have taken over the past five years significant steps to recognise and address challenges to meaningful financial inclusion.It is estimated that 60 percent of world GDP will be digitalised by 2022, while this growth in digital financial transactions requires a better understanding of how individuals are being identified and verified in the world of digital financial services. Digital identity, ID, technologies are evolving rapidly, giving rise to a variety of digital ID systems.Similarly, the ongoing digitalisation of the economy represents a major challenge that requires a balance between remote and digital onboarding for clients and ensuring compliance with regulations aimed at tackling money laundering and the financing of terrorism, AML/CFT regulations.Digital ID systems can offer new possibilities for achieving sustainable development goals if they are inclusive and trustworthy. When designed appropriately, Digital ID systems can be more secure than analogue systems, with stronger, more intelligent, and more easily monitorable data protection measures, which in turn offer better guarantees of data privacy.Taking advantage of these benefits, however, requires purposeful preventative action and an ongoing commitment to identifying and mitigating potential threats. Absence of such officially authenticated identification may pose disadvantages and undermine the financial inclusion of such individuals.The inability to credibly prove one's identity does not only hinder financial inclusion but may lead to an individual's political and social exclusion. In the financial services domain, absence of a valid and officially authenticated identification renders inaccessibility to the basic yet most crucial facilities like loans, bank accounts, ATMs etc. National governments play a primary role in enacting measures to facilitate the recording of legal identity for its residents.With increasing digitisation, national governments must now focus on implementing robust and digitally enabled identification systems that can increase individual's access to financial services and more holistic representation in the digital world. Therefore, it is incumbent that countries establish a reliable supervisory model to introduce efficient Digital ID systems.However, such implementation of systems on a nation-wide scale has its own challenges, namely, the risk of exclusion, political concerns, cost implications, data privacy, protection and security To foster financial inclusion, tiered and electronic KYC regime may be utilized by the Financial Institutions to gain foresight of their customer's objectives, needs and circumstances or be prepared to say that the client has refused to identify those objectives.Developments in technology have brought about various technology solutions, known as 'KYC utilities' which act as a single repository of customer identity data which is utilized for facilitating easier KYC process.By digitising processes through KYC utilities, the time required for identity checks and verification can be shorten, CDD compliance costs can be reduced and potentially the quality and reliability of customer data will be improved.With the intention of understanding the development of Digital ID and e-KYC programmes among the Arab countries, a questionnaire was circulated to the Regulatory and Supervisory authorities in the Arab Countries. Based on the findings of the survey, it is noted that Digital ID system are still in nascent stages, though there are systems in most countries for a government issued national identity system.Most countries are still following physical KYC structure with face-to-face interactions (or equivalent) and physical documents being the basis for client on-boarding and verification models. Bahrain and UAE appear to be the frontrunners in the implementation of an e-KYC model. Based on the findings of the survey, a range of action items have been proposed to Arab Countries: Establishment of a unique, legal, interoperable, Digital ID with an 'identity first' focus that collects minimal information for creation of an identity.Support the Digital ID framework by adoption of policies, rules and regulations addressing the risks or concerns associated with the use of Digital ID.Establish a 'risk-based' CDD regime which balances between the AML/CFT objective and financial inclusion objectives.Prioritize integrity of user data and facilitate processes and procedures for minimalistic sharing of the information during CDD.Create benchmarks and standards for use of any 'non-government' backed identity systems.Ensure complete, accurate and better integrated databases that can be utilized for customer identification and verification purposes.Implement a strong governance model to manage the Digital ID and CDD regime.Provide regulatory clarity, remove barriers and foster enabling regulatory environment for innovation which may provide newer solutions for CDD.Collaborate with regional and international bodies and regulators.Formulate transnational frameworks for interoperability and levels of assurance being implemented across Arab countries.