Financial Crime World

Authority Cracks Down on Financial Misconduct in Uganda’s Capital Markets

Kampala, Uganda - The Authority has taken decisive action to curb financial irregularities in Uganda’s capital markets, following a series of investigations and regulatory breaches.

Decisive Action Against Financial Irregularities

According to sources within the Authority, several entities have been issued warnings, fines, or had their licenses revoked for violating regulations governing the trade of long-term financial products. These products include:

  • Shares
  • Bonds
  • Commercial paper
  • Collective investment schemes

These products are traded publicly on the Uganda Securities Exchange (USE).

The Capital Markets Authority’s Efforts

The Capital Markets Authority of Uganda (CMA), a semi-autonomous government body responsible for regulating the capital markets industry, has been at the forefront of these efforts. In a statement released yesterday, the CMA announced that it had taken action against several market players who had failed to comply with regulations.

“We have zero tolerance for financial misconduct in our capital markets,” said a spokesperson for the Authority. “Our primary responsibility is to ensure that investors are protected and that the industry operates in an orderly, fair, and efficient manner.”

Regulating Market Players

The CMA regulates various entities, including:

  • Broker/dealers
  • Investment advisors
  • Collective investment scheme managers
  • Venture capital funds

To operate in these capacities, entities must first obtain a license from the Authority. To obtain a license, applicants must provide:

  • A detailed statement of their assets and liabilities
  • Copies of their last balance sheet and profit and loss account, which have been audited by their accountants

The Authority also conducts regular inspections and audits to ensure compliance with regulations.

Shari’ah Compliance Mechanism for Islamic Microfinance Institutions

In addition to these efforts, the Authority has established a Shari’ah compliance mechanism for Islamic microfinance institutions. These institutions must apply for approval before operating in this area.

Regulation of Tier 4 Microfinance Institutions and Money Lenders

The Tier 4 Microfinance Institutions and Money Lenders Act, 2016 provides for the establishment of the Uganda Microfinance Regulatory Authority (UMRA), which regulates tier 4 microfinance institutions and money lenders. The Act also establishes:

  • The SACCO Stabilization Fund
  • A SACCO Savings Protection Scheme to protect depositors

Under the law, tier 4 microfinance institutions and money lenders are required to obtain a license from UMRA before operating in Uganda. To obtain a license, applicants must provide:

  • Proof of their proposed dealings and transactions
  • Information on their governance structure
  • Minimum equity requirements
  • Liquidity and asset management practices

Conclusion

In conclusion, the Authority is committed to maintaining a strong and stable financial system in Uganda. The Authority will continue to take decisive action against entities that violate regulations. We urge all market players to comply with regulations and maintain high standards of ethics and integrity.