Financial Crime World

Uganda’s Financial Institutions Step Up Efforts to Combat Money Laundering and Counter-Terrorism Financing

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Kampala, Uganda - The Financial Intelligence Authority (FIA) has been exercising its supervisory powers to ensure that banks in Uganda are complying with the Anti-Money Laundering Act (AMLA) and combating money laundering and counter-terrorism financing.

Obligations of Banks under AMLA

Banks have several obligations to prevent money laundering and terrorist financing, including:

  • Registering with the FIA as an accountable person
  • Identifying customers through due diligence measures
  • Verifying identification information of prospective customers
  • Implementing risk assessment measures
  • Maintaining records for at least ten years
  • Recording and reporting cash transactions exceeding UGX20 million
  • Monitoring suspicious transactions
  • Conducting periodic anti-money laundering audits

Risk Assessment and Monitoring

Banks are also required to conduct constant monitoring of business relationships with politically exposed persons (PEPs) and obtain written approval from senior management before establishing a relationship with such individuals. PEPs include heads of state or government, senior politicians, judicial or military officials, and other prominent public figures.

Reporting Requirements

In addition to these obligations, banks must submit risk assessment reports, AML compliance reports, product risk assessment reports, suspicious transaction reports, and AML audit reports to the FIA on a timely basis.

Deposit Protection Fund Ensures Customer Safety

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The Financial Institutions Act as amended has established a Deposit Protection Fund to act as a deposit insurance scheme for customers of deposit-taking institutions licensed by the Bank of Uganda. The fund is managed by the Deposit Protection Fund Board, which receives contributions from financial institutions and microfinance deposit-taking institutions.

  • Every financial institution is required to contribute at least 0.2% of its average weighted deposit liabilities to the fund.
  • In the event of a bank closure, customers can lodge claims with the Deposit Protection Fund Board for payment of protected deposits up to UGX10 million (approximately USD2,643.04).

Bank Secrecy Maintained

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Confidentiality is a fundamental aspect of the banker-customer relationship in Uganda, supported by Article 27(2) of the Constitution of the Republic of Uganda. Banks owe their customers a duty of confidentiality, which extends to all information obtained from customers or third parties.

  • This duty may be overridden only in specific circumstances, including where disclosure is required by law, there is a public interest to disclose, or the bank’s interests require disclosure.
  • The protection of customer privacy is essential for building trust and confidence in the banking system.

Conclusion

The FIA will continue to monitor banks’ compliance with AMLA requirements to ensure that the financial system remains safe and secure for all stakeholders.