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Enhancing Financial Stability in Uganda: A Summary of Key Regulations

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Uganda has implemented various regulations to enhance financial stability, combat money laundering, and protect depositors. This article summarizes key points from these regulations.

1. The Role of the Financial Intelligence Authority (FIA)

Mandate

  • The FIA is mandated to identify proceeds of crime, combat money laundering, and prevent terrorism financing.

Supervisory Powers

  • The FIA exercises supervisory powers over banks in relation to money laundering and counter-terrorism financing.

2. Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) Requirements

Bank Registration

  • Banks must register with the FIA as accountable persons.

Customer Onboarding

  • Customers must be identified by:
    • True names
    • Address
    • Employment
    • Occupation at onboarding.
  • Verification of identification information is a continuous obligation throughout the existence of the relationship.

Risk Assessment Measures

  • Banks must implement risk assessment measures to identify and detect money laundering and terrorism financing.

3. Depositor Protection

Deposit Protection Fund

  • The Financial Institutions Act establishes a Deposit Protection Fund as a deposit insurance scheme for customers of deposit-taking institutions licensed by BOU.
  • Every financial institution is required to contribute to the fund a sum not less than 0.2% of its average weighted deposit liabilities.

Deposit Protection Limit

  • Every customer deposit is protected up to UGX10 million (approximately USD2,643.04).

4. Bank Secrecy

Confidentiality Duty

  • Confidentiality is a fundamental aspect of the banker-customer relationship under Ugandan law and its origin can be traced from common law.
  • Banks owe their customers a duty of confidentiality, which may only be overridden in four instances:
    • Where disclosure is under compulsion of law
    • There is a duty to the public to disclose
    • The interests of the bank require disclosure
    • When authorized by law