Uganda Introduces Stricter KYC Regulations for Financial Institutions

In an effort to combat money laundering and terrorist financing, the Uganda Securities Exchange (USE) has introduced new Know Your Customer (KYC) regulations for all financial institutions operating in Uganda. The regulations came into effect on June 5th and require all institutions to obtain specific documents from their clients before opening an account.

Objective of the Regulations

The primary objective of these regulations is to ensure that financial institutions have a clear understanding of their customers’ identities and activities, thereby reducing the risk of money laundering and terrorist financing. The regulations require institutions to verify the identity of their clients through various means, including identification documents, proof of address, and information about the client’s business or occupation.

Documents Required

Under the new regulations, individuals, whether local or foreign, are required to provide the following documents:

• Three colored passport photos
• Identification documents (national IDs, passports, driving permits)
• Fully filled and executed Form 1A
• Summary of their business activities

Foreign nationals are also required to provide certified copies of their passports.

Additional Requirements for Minors

Minors, including those from East Africa, are required to provide the following additional documents:

• Birth certificates
• Certified copies of their parents’ identification documents
• Summary of business activities (same as individuals)

Requirements for Companies and Other Entities

Companies, partnerships, clubs, associations, and committees not set up by government are required to provide different sets of documents, depending on their legal status. These documents include:

• Certification of incorporation
• Articles of association
• Board resolutions
• Proof of identity for signatories

Estate Accounts

Estate accounts require letters of administration or probate, as well as proof of identity for signatories.

Consequences of Non-Compliance

The USE has warned that failure to comply with the new regulations will be treated as a default of membership obligations and may result in account rejection. The exchange also reserves the right to request additional KYC documents in specific cases.

Impact on the Financial Sector

The introduction of these regulations is seen as a positive step towards ensuring transparency and accountability in Uganda’s financial sector, and is expected to reduce the risk of money laundering and terrorist financing in the country.