Financial Crime World

Title: Ugandan NGOs Brace Up Against Money Laundering and Terrorist Financing: FIA Issues Guidance

The Financial Intelligence Authority (FIA) in Uganda has issued a new guidance note for Non-Government Organisations (NGOs) to help them understand their obligations under anti-money laundering and countering the financing of terrorism (AML/CFT) regulations. The move is aimed at strengthening the regulatory framework for NGOs and ensuring they don’t become conduits for illicit activities.

1. Introduction

With the heightened vulnerability of NGOs to money laundering (ML) and terrorist financing (TF), the FIA’s guidance note provides sector-specific guidance for local NGOs on their legal obligations. The legislation includes the following:

  • Anti-Money Laundering Act, 2013
  • Non-Government Organisations Act, 2016

2. The Importance of Combating ML/TF in NGOs

NGOs are at risk of being misused by terrorists and terrorist organizations to launder money or obscure the diversion of funds intended for legitimate purposes. The Financial Action Task Force (FATF) requires countries to review the adequacy of their laws and regulations related to NGOs and take risk-based measures to mitigate these vulnerabilities (Recommendation 8).

All NGOs are required to adhere to the following obligations under the AMLA and AML regulations:

  • Registration with the FIA: All NGOs must register with the FIA for supervision and notify any changes of address to the FIA.
  • Customer due diligence: NGOs must establish the identities of their donors or beneficiaries and verify them through reliable and independent sources.
  • Reporting suspicious transactions: NGOs are obligated to report suspicious transactions to the FIA.
  • Ensuring internal controls: NGOs must implement policies, procedures, and controls to prevent ML/TF activities.
  • Appointing a Money Laundering Control Officer (MLCO): Larger NGOs must appoint an MLCO responsible for program implementation, enforcement, and oversight.
  • Compliance programme: NGOs must develop, implement, and test their AML/CFT programmes.

4. Registration with the FIA

Regulation 4 of the AMLA Regulations requires all NGOs to register with the FIA for supervision and notify them of any changes of address. NGOs can register online through the FIA’s website (http://www.fia.go.ug) or download and physically deliver the forms to the FIA office.

5. Customer Due Diligence (CDD)

NGOs must establish the identities of their donors or beneficiaries and verify them through reliable and independent sources to mitigate the risks of NGOs being misused for suspicious activities.

6. Reporting Suspicious Transactions and Cash Transactions

NGOs are obligated to report suspicious transactions and certain cash transactions (defined as those involving possible ML or TF activities) to the FIA. The due diligence process should help NGOs identify potentially suspicious transactions.

7. Ensuring Internal Controls

Implementing policies, procedures, and controls to prevent ML/TF activities involves:

  • Size and nature of the NGO: The larger the NGO, the more stringent the monitoring practices need to be.
  • Monitoring methods: Regular reviews of transactions and ongoing monitoring procedures.

8. Appointing a Money Laundering Control Officer (MLCO)

Larger NGOs must appoint an MLCO responsible for implementing, enforcing, and oversight of the NGO’s AML/CFT programme:

  • They are responsible for reporting suspicious transactions, maintaining records, and ensuring compliance with the AML/CFT regulations.

9. Implementing and Testing the Compliance Programme

NGOs must develop, implement, and regularly test their AML/CFT programme to ensure its effectiveness:

  • Small NGOs are encouraged to use an external independent review to assess the programme’s implementation.