Financial Crime World

Title: Ugandan NGOs Brace for Stricter “Know Your Customer” Regulations Under Money Laundering Law

In the Spotlight

The Anti-Money Laundering Act 2013, a landmark legislation in Uganda, targets the prevention and combating of money laundering and associated illegal activities. This law applies to Non-Governmental Organizations (NGOs) and designated accountable persons, introducing the “Know Your Customer” (KYC) requirement. Chapter Four Uganda outlines the key points NGOs in Uganda must comply with regarding this legal obligation.

Understanding KYC Requirements for NGOs

What is “Know Your Customer” (KYC)?

KYC represents the essential process of identifying and assessing the risks associated with an NGO’s customers. As accountable entities under this legislation, NGOs must apply the KYC procedure to verify the identities and evaluate potential risks for criminal intentions, similar to financial institutions and legal professionals.

Embracing KYC: A Helping Hand for NGOs

With the KYC regulations, NGOs must manage relationships with people or entities that provide funds to the organization or receive payments from it. These entities might include:

  1. Donors and development partners
  2. Grantees and recipients of funds
  3. Project beneficiaries (e.g., village groups, refugees, individuals)
  4. Consultants and other service providers engaging with the entity

NGOs’ Obligations under Ugandan KYC Regulations

To comply with Ugandan KYC regulations, NGOs must:

  1. Establish the genuine identity of individuals or entities: For individuals - documents which prove identity such as ID cards. For entities like an NGO, a trustee, a company, or a partnership - obtain registration documents (e.g., certificates of registration, constitutions, articles of association) and identify their promoters.

Building Effective KYC Systems: Key Steps for NGOs

Identify the Customer

  1. Gain a clear understanding of who you are dealing with

Verify the Customer’s Identity

  1. Confirm the authenticity of your clients’ identities

Assess Potential Risks

  1. Determine the likelihood of engaging in activities that could pose a risk to your organization

Continuously Monitor Engagement

  1. Stay informed of any suspicious activities linked to your clients

Maintain Comprehensive Records

  1. Retain records of your clients’ identities for a minimum of ten years