Financial Crime World

UGANDA BANKS FIGHT MONEY LAUNDERING AND COMPLY WITH AMLA REGULATIONS

Kampala, Uganda - The Financial Intelligence Authority (FIA) has intensified its supervisory powers over banks to combat money laundering and counter-terrorism financing.

Compliance with Anti-Money Laundering Act (AMLA)

To ensure compliance with the Anti-Money Laundering Act (AMLA), banks in Uganda are required to implement various measures to prevent and detect illicit activities. Some of these obligations include:

  • Registering with the FIA as accountable persons
  • Identifying customers through due diligence measures
  • Verifying their identities throughout the existence of the relationship

Risk Assessments and Record Keeping

Banks must also conduct risk assessments to identify, assess, detect, and monitor money laundering and terrorism financing transactions. They are required to maintain records on:

  • Customer identification information
  • Account files
  • Business correspondence
  • For at least 10 years

Reporting Suspicious Transactions

In addition, banks are obligated to record and report each cash and monetary transaction exceeding UGX20 million (approximately USD5,652). Suspicious transactions must be reported to the Financial Intelligence Authority.

Regulation of Politically Exposed Persons (PEPs)

The FIA has also introduced measures to regulate transactions involving Politically Exposed Persons (PEPs), including:

  • Obtaining written approval from senior management before establishing a business relationship with such individuals
  • Conducting constant monitoring of these relationships
  • Maintaining records on their sources of wealth

Compliance Requirements

To ensure compliance, banks must conduct periodic anti-money laundering audits and submit reports to the FIA in a timely manner, including:

  • Risk assessment reports
  • AML compliance reports
  • Product risk assessment reports
  • Suspicious transaction reports
  • AML audit reports

DEPOSITOR PROTECTION REGIME

The Financial Institutions Act has established a Deposit Protection Fund to protect customers of deposit-taking institutions licensed by the Bank of Uganda.

Fund Management and Control

The fund is managed and controlled by the Deposit Protection Fund of Uganda. Every financial institution is required to contribute 0.2% of its average weighted deposit liabilities to the fund.

Coverage and Payments

The fund covers deposits up to UGX10 million (approximately USD2,643.04) per customer. In the event of a bank’s closure, customers can lodge claims with the Deposit Protection Fund Board for payment of their protected deposits. Payments are made within 90 days after closure, and the fund is entitled to receive the amount paid from the financial institution.

BANK SECRECY

Ugandan banks owe their customers a duty of confidentiality under common law and Article 27(2) of the Constitution of the Republic of Uganda.

Duty of Confidentiality

This duty extends to all information obtained by the bank arising out of the banking relationship with the customer, including personal, account, and transactional information.

Exceptions to Duty of Confidentiality

However, this duty can be overridden in four instances:

  • Where disclosure is required by law
  • Where there is a duty to disclose to the public
  • Where the interests of the bank require disclosure
  • Where consent has been given by the customer