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Comprehensive Licensing Policy for Financial Institutions in Uganda

Issued by Bank of Uganda (BoU) in 2021

The Bank of Uganda has issued a comprehensive licensing policy document outlining the requirements and procedures for obtaining a license to operate as a financial institution in Uganda. This article provides a summary of the key points.

Applications

  • Applications must be addressed to the Governor of BoU.
  • Proposed types of institutions and supporting documentation must meet specific criteria and formats prescribed under Part 4 of the Licensing Policy.

BOU Review Process

The review process is risk-based, focusing on:

  • Risk Management Strategy: assessment of risk identification, measurement, monitoring, and management mechanisms.
  • Individual Beneficial Shareholders and Board Members: interviewing and reviewing individual beneficial shareholders and proposed board members.
  • Knowledge of the Financial Sector: applicant’s knowledge of the structural features inherent to the financial sector in Uganda.
  • Risks Associated with Entry: risks associated with the applicant’s entry into the financial sector.

Decision Timeline

  • The applicant will be informed within a maximum period of 3 months from receipt of the complete application about the decision to grant or decline a license.

Additional Requirements

  • Review of applications may include information available in the public domain.
  • Name Verification: BoU approval is required upon receipt of a name verification from the Uganda Registration Services Bureau.
  • Independent Directors: at least one-third (1/3) of non-executive directors must be independent.
  • Emerging Trends: the review process will take into account emerging trends in the financial sector.

License Agreement

A license certificate granted to a successful applicant shall be accompanied by a License Agreement, which stipulates:

  • Terms and Conditions: terms and conditions of the license.
  • Approved Bank Activities: approved bank activities and financial institution business.
  • Reporting Requirements: reporting and disclosure requirements.
  • Legal Compliance Obligations: legal compliance obligations. The License Agreement must be signed by significant shareholders.

Capital Requirements

  • The applicant must have a minimum paid-up capital as prescribed by BoU.
  • No shareholder shall hold more than 49% of shares, except for reputable financial institutions or public companies meeting specific criteria.

Fees

  • Application Fee: an application fee is payable on submission of the license application to Governor.
  • License Fee: a license fee is payable upon notification of approval and annually on January 31st.

Implementation

The Supervision Directorate will be responsible for implementing this Licensing Policy effective July 1, 2021.