Financial Crime World

Banking Regulations in Uganda: Key Aspects

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Roles of Directors

Directors play a crucial role in the effective functioning of banks. Their responsibilities can be summarized into four key areas:

  • Providing Strategic Direction: Directors are responsible for setting the overall vision and strategy of the bank.
  • Policy Formulation: Directors formulate policies that guide the bank’s operations and decision-making processes.
  • Decision-Making: Directors make informed decisions on behalf of the bank, taking into account the interests of shareholders and stakeholders.
  • Oversight of Executive Management: Directors oversee the executive management team, ensuring they are performing their duties effectively.

As fiduciaries, directors stand in a special relationship with the bank and its shareholders. They must act in good faith and with utmost honesty, always prioritizing the interests of the bank and its stakeholders.

Remuneration Requirements

The remuneration of bank directors is not governed by specific laws or regulations in Uganda. Instead, it is determined solely by the bank’s compensation committee, taking into account factors such as performance, experience, and industry standards.

  • No Prescribed Remuneration: There are no specific remuneration requirements prescribed by law or the Bank of Uganda (BOU) applicable to banks.
  • Determining Remuneration: The bank’s compensation committee determines director remuneration based on its own policies and guidelines.

Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT) Requirements

The primary legislation regulating money laundering and CFT in Uganda is the Anti-Money Laundering Act (AMLA) as amended, and the Anti-Terrorism Act as amended. The AMLA establishes the Financial Intelligence Authority (FIA) to enhance the identification of proceeds of crime and combat money laundering and CFT.

Key Obligations Under the AMLA

  • Registration with FIA: Banks must register with the FIA as accountable persons.
  • Customer Identification and Verification: Banks must identify and verify customers, including individuals and entities.
  • Risk Assessment Measures: Banks must implement risk assessment measures to identify, assess, detect, and monitor money laundering and terrorism financing activities.
  • Record Keeping: Banks must maintain records on customer identification information, account files, and business correspondence for at least 10 years.
  • Reporting Requirements: Banks must record and report cash and monetary transactions exceeding UGX20 million.

By complying with these AML/CFT requirements, banks can effectively mitigate the risks associated with money laundering and terrorism financing, maintaining a safe and secure financial system in Uganda.