Frequently Asked Questions

Commonly asked questions.

Who is a money launderer?

A money launderer is a person or a group of persons that are in possession of the proceeds of a crime or of the assets that represent the proceeds of illegal activities such as fraud, theft, drug trafficking, or any other crimes.

 

How is money laundering conducted?


a) Placement: Where the ‘dirty’ money is placed into the financial institutions or retail economy through bank deposits etc.
b) Layering: Means separating the illegally obtained money from its source through a series of financial transactions that makes it difficult to trace the origin
i.e. several bank-to-bank transfers, wire transfers between different accounts in different names in different countries, changing the money's currency etc.
c) Integration: Means converting the illicit funds into legitimate property i.e. by purchase of high value goods/property, purchasing businesses, automobiles, among others.

What reports are received by the Financial Intelligence Authority?

In order to discharge its functions, the FIA receives information from various sources. These include:
a) Suspicious Transaction Reports;
b) Large Cash and Monetary Transactions Reports; and
c) Cross Border Movement of Currency and Negotiable Bearer Instruments Reports

What is a Suspicious Transaction?

A suspicious transaction refers to a transaction which is inconsistent with a customer’s known legitimate business or personal activities or with the normal business for that type of account or business relationship, or a complex and unusual transaction or complex or unusual pattern of transaction.

What are the main offences relating to suspicious transaction reporting in respect of ML and TF?


The main offences include:
(a) Failure to report suspicious or unusual transactions Section 125 of the AMLA).
(b) Tipping off (Section 117 of the AMLA).

What is a person’s legal obligation or responsibility in respect of reporting ML/TF?

When a person knows or suspects that, any property represents:
(a) the proceeds of crime or other indictable offences or is intended to be used in connection with such offences, or
(b) terrorist property,
he or she should, as soon as reasonably practicable, report such information to the Financial Intelligence Authority (FIA) within 48 hours or to a Money laundering control officer designated by his or her employer for Anti-Money Laundering ("AML") purposes. Such suspicious transaction reporting is a statutory obligation. For such obligation to arise, it is not necessary to be able to identify or suspect:
(a) the specific nature of the offence, or even to establish that an offence has, in fact, been committed or will be committed, or

(b) the specific nature of the terrorist act for which the property is intended to be used, or that a particular person is, in fact, a terrorist or a terrorist associate.

What counts as suspicion?

A suspicion may be formed without knowing all the detailed elements that make up a particular criminal offence, or whether those elements have been established, or without knowing the details of any plan for an act of terrorism. If a person has formed a suspicion, there is a duty to report on that suspicion.
The dictionary defines “suspicion” as implying a belief or opinion based upon facts or circumstances that do not constitute proof. Case law and other sources indicate that suspicion is more than speculation but less than proof or knowledge. Suspicion is personal and subjective but will generally be built upon some objective foundation.

Which legislation in Uganda imposes the statutory obligation of Suspicious Transaction Reporting and what are the relevant sections?

The AMLA 2013 as amended and the Anti-Money Laundering Regulations 2015 provide for statutory obligations to address the problems associated with ML/TF. Suspicious transaction reporting requirements are provided for under section 9 of the AMLA 2015 as amended and regulations 39 and 40 of the AML Regulations 2015.

Where can I find guidance on indicators of suspicious transactions?


FIA has listed some examples of suspicious transaction indicators on its website. However key indicators include the following;
•Client starts conducting frequent cash transactions in large amounts when this has not been a normal activity for the client in the past.
•Client consistently makes cash transactions that are significantly below the reporting threshold amount in an apparent attempt to avoid triggering the requirements to identify and report these transactions.
•Stated occupation of the client is not in keeping with the level or type of activity (for example, a student or an unemployed individual makes daily maximum cash withdrawals at multiple locations over a wide geographic area)
•Transaction involves non-profit or charitable organization for which there appears to be no logical economic purpose, or where there appears to be no link between the stated activity of the organization and the other parties in the transaction.
•Transaction appears to be out-of-the-ordinary for industry practice or does not appear to be economically viable for the client (for example, taking a mortgage or a loan at a high rate of interest).
•Transaction involves non-profit or charitable organization for which there appears to be no logical economic purpose, or where there appears to be no link between the stated activity of the organization and the other parties in the transaction.
•Transaction appears to be out-of-the-ordinary for industry practice or does not appear to be economically viable for the client (for example, taking a mortgage or a loan at a high rate of interest).
•Transaction involves non-profit or charitable organization for which there appears to be no logical economic purpose, or where there appears to be no link between the stated activity of the organization and the other parties in the transaction.
•Transaction appears to be out-of-the-ordinary for industry practice or does not appear to be economically viable for the client (for example, taking a mortgage or a loan at a high rate of interest).
•Transaction involves non-profit or charitable organization for which there appears to be no logical economic purpose, or where there appears to be no link between the stated activity of the organization and the other parties in the transaction.
•Transaction appears to be out-of-the-ordinary for industry practice or does not appear to be economically viable for the client (for example, taking a mortgage or a loan at a high rate of interest).
•Transaction involves non-profit or charitable organization for which there appears to be no logical economic purpose, or where there appears to be no link between the stated activity of the organization and the other parties in the transaction.
•Transaction appears to be out-of-the-ordinary for industry practice or does not appear to be economically viable for the client (for example, taking a mortgage or a loan at a high rate of interest).

What are the procedures to report suspicious transactions?

The agency to which suspicious transaction reports ("STRs") should be sent is the FIA and it has developed an information guide on:
(a) How to identify a "suspicious" transaction?
(b) When to submit an STR?
(c) How to submit an STR?
(d) What to report in an STR?

Is it always necessary to report direct to the Financial Intelligence Authority?

Under section 20 and 21 of the AMLA an employee who discloses knowledge or suspicion to an appropriate person, in accordance with procedures established by the employer for the making of such disclosures, is regarded as discharging his/ her responsibilities under the law. In other words, if an employer has designated a particular person as an AML Control or reporting officer, to receive
reports from staff, then it is sufficient for employees to make disclosures to that person. The MLCO is responsible for making STRs to the FIA. In order to be able to fulfil the role adequately, the MLCO should be a person of sufficient seniority and authority within the organization.

What is the consequence of the failure to report a suspicious transaction?

Failure to report a suspicious transaction where a person has the requisite knowledge or suspicion is a criminal offence. The offence carries a maximum penalty of fifteen years of imprisonment and or a fine of Two Billion Uganda Shillings See sections 125 and 136 of AMLA 2013.

Is a person making a suspicious transaction report protected from prosecution when they have reported knowledge or suspicion of money laundering?

Yes, making an STR can protect a person from being subsequently prosecuted for the offence of dealing in property that is the proceeds of crime or an indictable offence, in the circumstances provided for State legal provision. Section 37 of the AMLA 2013.

Is the identity of the person filing a suspicious transaction report protected?

The identity of the person filing an STR is strictly confidential. Access to the disclosed information is restricted to Financial Intelligence Authority Officers only. The AMLA 2013 impose tight restrictions on revealing the identity of the person making the report. FIA considers that maintaining the integrity of the relationship, established between reporting entities to be of paramount importance.

Would making a suspicious transaction report be considered a breach of any restriction on disclosure of information?

A disclosure made in good faith to FIA will not be treated as a breach of any contract, enactment, rule of conduct, or other provision restricting disclosure of information, and will not render the person making the disclosure liable in damages for any loss arising out of the disclosure. This is clear in Section 14 (1) of AMLA

What is tipping off and what is the consequence of tipping off?

Tipping off is where a person, knowing or suspecting that a disclosure has been made to the FIA , or a MLCO, discloses to another person any matter that is likely to prejudice an investigation that might be conducted as a result. Tipping
off is a criminal offence under section 117 of AMLA 2013 and carries a maximum penalty, on conviction upon indictment, of;
(a) if committed by a natural person, by imprisonment for a period not exceeding five years or a fine not exceeding thirty three thousand currency points (Ugx 660,000,000), or both;
(b) if committed by a legal person such as a corporation, by a fine not exceeding seventy thousand currency points (Ugx 1,400,000,000);
(c) if a continuing offence, by a fine not exceeding five thousand currency points for each day on which the offence continues; or
(d) if no specific penalty is provided, by a fine not exceeding nine thousand currency points and in case of a continuing offence, to an additional fine not exceeding five thousand currency points for each day on which the offence continues. Section 136 (2)

What is the Financial Action Task Force on Money Laundering and how is it relevant to Uganda

The Financial Action Task Force (FATF) is an international, Inter-governmental body whose purpose is the development and promotion of national and international policies to combat ML & TF. Uganda is a member of Eastern and Southern Africa Anti Money laundering Group (ESAAMLG) which is FATF Style Regional Body (FSRB). The 40 FATF Recommendations, apply to the country’s AML/CFT framework.

What are some quick links to resources that can provide more information on this topic?

(a) ESAAMLG Website
(b) FIA website
(c)FATF’s website for International guidance and statements