Financial Crime World

KYC Customer Due Diligence in Uganda: A Necessity for Financial Institutions

In an effort to combat money laundering and terrorist financing, financial institutions in Uganda are required to have a robust Know Your Customer (KYC) customer due diligence process in place.

Compliance with Anti-Money Laundering Law

According to the Anti-Money Laundering (AML) law in Uganda, all accountable persons must have an AML policy that outlines procedures for detecting and preventing money laundering risks. The policy should include elements such as:

  • A system of internal policies, procedures, and controls
  • A designated compliance function with a compliance officer
  • Ongoing employee training programs
  • An independent audit function to test the overall effectiveness

Customer Due Diligence (CDD)

Financial institutions must conduct CDD on their customers, which involves identifying and verifying their identity. A risk-based approach should be adopted, where:

  • Enhanced due diligence measures are required for high-risk customers
  • Simplified measures are sufficient for low-risk customers

Regulatory Requirements

The Financial Intelligence Authority (FIA), the regulatory body responsible for supervising financial institutions in Uganda, requires that all accountable persons submit their AML policies to them for review and feedback.

Compliance Obligations

To ensure compliance with the law, financial institutions must:

  • Conduct regular risk assessments to identify high risks and adopt appropriate measures to mitigate those risks
  • Put in place adequate controls to prevent money laundering and terrorist financing
  • Adhere to record-keeping requirements
  • Report suspicious transactions and AML audit findings in a timely manner

Employee Training

Financial institutions are required to provide ongoing training to their staff on matters of:

  • Money laundering and terrorism financing
  • Developments in the law

This ensures that employees are knowledgeable about the procedures to be followed and their relevance to mitigating risks in their departments.

Conclusion

KYC customer due diligence is a critical component of an effective AML program in Uganda. Financial institutions must ensure that they have robust policies and procedures in place to detect and prevent money laundering and terrorist financing, and report suspicious transactions and AML audit findings in a timely manner.