Financial Crime World

Know Your Customer: A Guide to Uganda’s Anti-Money Laundering Regulations

The Ugandan government enacted the Anti-Money Laundering Act in 2013 to combat money laundering and other financial crimes. As part of this effort, non-governmental organizations (NGOs) are now required to implement Know Your Customer (KYC) procedures to prevent illegal activities.

What is KYC?

In simple terms, KYC is a process that verifies the identity of an NGO’s clients and assesses potential risks associated with their relationship. This requirement applies not only to NGOs but also to financial institutions, lawyers, and other accountable persons.

Who are considered customers of an NGO in Uganda?

The definition includes individuals or entities providing funds to an NGO as well as those receiving funds from the organization. This can include:

  • Donors
  • Development partners
  • Project beneficiaries
  • Consultants
  • Service providers

Designing Effective KYC Systems

To design effective KYC systems, organizations must follow these five basic steps:

Step 1: Identify Your Customer

  • Obtain identification documents
  • Clarify the identity of individuals or entities

Step 2: Verify Identity

  • Verify the identity of your customer where reasonable and high-risk situations arise
  • Use third-party verification to prevent identity theft and assess business risk

Step 3: Assess Potential Risks

  • Conduct Enhanced Customer Due Diligence (EDD) when necessary
  • Identify potential risks associated with each engagement

Step 4: Conduct Ongoing Due Diligence

  • Monitor continued engagements
  • Address any suspicions that may arise

Step 5: Maintain Accurate Records

  • Keep accurate records of client identification for a minimum period of 10 years

Compliance is Key

NGOs in Uganda must ensure compliance with these KYC requirements to prevent money laundering and other financial crimes. Failure to comply can result in severe consequences, including fines and legal action.

For More Information

For more information on Uganda’s anti-money laundering regulations, contact Chapter Four Uganda at:

  • Plot 2 Wampewo Close, Kololo, Kampala
  • +256 790 916 614