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Ugandan Banks Required to Comply with Regulatory Guidelines

Kampala, Uganda - The Bank of Uganda (BOU) has issued guidelines for the registration and oversight of senior management in Ugandan banks. These guidelines aim to ensure good corporate governance, business performance, and depositor protection.

Registration and Oversight of Senior Management

According to the guidelines, banks are required to:

  • Appoint an independent committee to oversee compliance with lending policy, delegate lending limits, and approve credit facilities above the sanctioning authority of management.
  • Develop a code of conduct that focuses on ethical risk, fair dealing, anti-discrimination, gifts, and relationships with customers.

The code of conduct is intended to foster a culture of honesty and accountability among directors.

Approval of Directors

Before appointing any director or senior manager, banks must:

  • Obtain approval from the BOU.
  • Undergo a selection process that considers their knowledge, skills, integrity, reputation, ability to perform duties, and potential conflicts of interest.

The BOU vetted proposed directors within six months and notifies the bank if they are deemed fit and proper. The fit and proper criteria includes:

  • General probity
  • Competence
  • Soundness of judgment
  • Diligence
  • Previous conduct

Remuneration Requirements

There are no specific remuneration requirements prescribed by law or the BOU for banks. Remuneration is solely determined by the bank, guided by a compensation committee that ensures consistency with the institution’s culture, objectives, strategy, and control environment.

Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT)

The Anti-Money Laundering Act (AMLA) criminalizes money laundering and counter-terrorism financing. Banks are required to:

  • Register with the Financial Intelligence Authority (FIA).
  • Identify customers through due diligence measures.
  • Implement risk assessment measures.
  • Maintain records for at least ten years.
  • Report suspicious transactions.

Banks must also:

  • Monitor and report transactions inconsistent with a customer’s known legitimate business or personal activities.
  • Obtain written approval from senior management before establishing a business relationship with a politically exposed person (PEP).

Depositor Protection

The BOU has implemented measures to protect depositors, including the requirement for banks to:

  • Maintain minimum capital requirements.
  • Implement risk-based supervision.
  • Conduct regular audits.

In conclusion, Ugandan banks are required to comply with regulatory guidelines to ensure good corporate governance, business performance, and depositor protection. Failure to comply may result in legal consequences and reputational damage.