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Uganda’s Financial Institutions Urged to Exercise Caution in Handling Politically Exposed Persons’ Transactions

Kampala - In a joint statement, Uganda’s top banking regulatory bodies have sought to clarify due diligence requirements for customers considered Politically Exposed Persons (PEPs) under the Bank Secrecy Act and Anti-Money Laundering regulations.

What are Politically Exposed Persons?

According to the statement, PEPs are individuals who hold prominent public positions or have close family ties with such officials. These individuals may pose a higher risk of their funds being derived from corrupt activities. Financial institutions are advised to take a risk-based approach in conducting customer due diligence, with the level and type of scrutiny commensurate with the risks presented by the PEP relationship.

Key Clarifications

• There is no regulatory requirement for unique or additional due diligence steps for customers considered PEPs.
• U.S. public officials are not deemed PEPs under this definition.
• The Bank Secrecy Act and Anti-Money Laundering regulations do not create new supervisory expectations or alter existing legal requirements.

Guidance for Financial Institutions

Uganda’s financial institutions have been urged to exercise caution when dealing with transactions involving PEPs and their close associates. The statement also clarifies that the Bank Secrecy Act and Anti-Money Laundering regulations are aimed at providing guidance on how to comply with these regulations.

Next Steps

Financial institutions in Uganda have been advised to:

• Distribute this statement to their supervised entities and supervisory staff.
• Send questions regarding the statement via the Board’s public website.

Note: The joint statement has been issued by the Board of Governors of the Federal Reserve System, the Financial Crimes Enforcement Network (FinCEN), the National Credit Union Administration, and the Office of the Comptroller of the Currency.