Financial Crime World

Uganda’s Financial Institutions Crack Down on Money Laundering and Terrorism Financing

Kampala, Uganda - The Financial Intelligence Authority (FIA) has stepped up its efforts to combat money laundering and terrorism financing in Uganda’s financial institutions. As part of this effort, banks are required to comply with the Anti-Money Laundering Act (AMLA) and Counter-Terrorism Financing (CFT) regulations.

AML/CFT Requirements

Under the AMLA, banks are obligated to:

  • Register with the FIA as accountable persons
  • Identify customers by their true names, addresses, employment, and occupation during onboarding
  • Verify customer identification information through due diligence measures, which is a continuous obligation throughout the existence of the relationship
  • Implement risk assessment measures to identify, assess, detect, and monitor money laundering and terrorism financing risks
  • Maintain records of customer identification information, account files, and business correspondence for at least 10 years

Reporting Suspicious Transactions

Banks are also obligated to report any suspicious transactions to the FIA, including:

  • Cash and monetary transactions exceeding UGX20 million
  • Transactions that are inconsistent with a customer’s known legitimate business or personal activities

Politically Exposed Persons (PEPs)

The AMLA requires banks to exercise enhanced due diligence when dealing with PEPs, including:

  • Obtaining written approval from senior management before establishing a business relationship with a PEP
  • Determining the source of wealth of the PEP
  • Conducting continuous monitoring of the business relationship

Depositor Protection

In addition to combating money laundering and terrorism financing, Uganda’s financial institutions are also required to participate in the Depositor Protection Fund, which provides protection for customer deposits up to UGX10 million (approximately USD2,643.04) in the event of a bank failure.

Bank Secrecy

Ugandan banks are obligated to maintain confidentiality in all transactions with their customers, supported by Article 27(2) of the Constitution of the Republic of Uganda, which protects the right to privacy. However, this duty may be overridden in four instances:

  • Where disclosure is required by law
  • There is a duty to disclose to the public
  • The interests of the bank require disclosure
  • Where there is consent from the customer

Consequences of Non-Compliance

Failure to comply with AML/CFT regulations can result in serious consequences, including fines and imprisonment. Banks are therefore urged to prioritize compliance with these regulations to ensure the integrity of the financial system and protect their customers’ deposits.

The FIA has pledged to intensify its efforts to monitor and enforce compliance with AML/CFT regulations, and banks are encouraged to work closely with the authority to ensure a safe and stable financial environment in Uganda.