Financial Crime World

FIA Cracks Down on Money Laundering and Terror Financing

The Financial Intelligence Authority (FIA) has intensified its efforts to combat money laundering and terror financing in Uganda’s financial institutions. In a bid to ensure compliance with Anti-Money Launderling Act (AMLA) regulations, FIA has been exercising its supervisory powers over banks and other financial institutions.

AMLA Regulations

According to the AMLA, financial institutions are required to implement robust measures to prevent and detect money laundering and terror financing activities. The regulations require:

  • Banks to register with FIA as accountable persons
  • Identification of customers by their true names and addresses
  • Verification of customer identification information through due diligence measures
  • Maintenance of records of customer transactions for at least 10 years
  • Reporting of any suspicious transactions to FIA

Risk Assessment Measures

FIA has also issued guidelines on the implementation of risk assessment measures to identify, assess, detect, and monitor money laundering and terror financing activities. Financial institutions are required to:

  • Conduct periodic anti-money laundering audits
  • Submit risk assessment reports, AML compliance reports, and suspicious transaction reports to FIA
  • Monitor and report transactions that are inconsistent with a customer’s known legitimate business or personal activities

Politically Exposed Persons (PEPs)

Financial institutions are also required to obtain written approval from senior management before establishing a business relationship with a PEP. PEPs include individuals who have held prominent public offices or have been entrusted with significant responsibilities in government, politics, or other sectors.

Deposit Protection Fund

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The Financial Institutions Act has established a Deposit Protection Fund to protect customers of deposit-taking institutions licensed by the Bank of Uganda. The fund is managed and controlled by the Deposit Protection Fund Board, which receives contributions from financial institutions and microfinance deposit-taking institutions.

  • Provides protection for customer deposits up to UGX 10 million (approximately USD 2,643.04)
  • Customers can lodge claims with the Deposit Protection Fund Board in the event of a financial institution’s closure

Bank Secrecy

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Ugandan banks owe their customers a duty of confidentiality, which is supported by Article 27(2) of the Constitution of the Republic of Uganda. This means that banks are required to maintain appropriate confidentiality in all transactions with their customers and not disclose information concerning customer affairs without consent.

However, there are four instances where the duty of confidentiality may be overridden:

  • Disclosure compelled by law
  • Duty to the public to disclose
  • Interests of the bank require disclosure

Banks must ensure that they maintain appropriate confidentiality in all transactions with their customers and avoid any breaches of this duty.

Conclusion

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The FIA’s efforts to combat money laundering and terror financing are part of its broader mandate to promote financial stability and integrity in Uganda. The agency is working closely with financial institutions, law enforcement agencies, and other stakeholders to prevent and detect these illegal activities.