'Anti-Money Laundering Act revision will support regulatory framework'

KAMPALA - Parliament on January 23, 2025, amended Schedule 2 of the Anti-Money Laundering Act, Cap. 118, exempting non-governmental organizations (NGOs), churches, and other charitable organisations from the list of accountable persons in the fight against money laundering. 

Uganda will now adopt a risk-based approach, focusing only on NGOs actually at risk of money laundering and terrorism financing.

This revision is expected to have a profound impact on the regulatory framework for Non-Profit Organisations (NPOs) in Uganda, according to several civil society organisations.

They say this decision provides a fairer regulatory environment, empowering NGOs to continue their vital work without excessive scrutiny while strengthening Uganda's fight against financial crime.

Civic Advisory Hub director and team leader at Defenders Protection Initiative (DPI) Yona Wanjala on January 27, 2025, said the removal of NPOs from the list acknowledges their crucial contribution to national development.

During a media briefing at DPI's offices in Ntinda, Kampala city, Wanjala said this change will pave the way for a more supportive regulatory framework by addressing various operational challenges faced by NPOs.

The revised Act means the Government will focus on identifying and targeting high-risk NPOs, rather than imposing blanket restrictions on the entire sector. 

The risk assessment will be based on a comprehensive NPO risk evaluation for terrorism financing following recommendations by the Financial Action Task Force (FATF) and Eastern and Southern Africa Anti-Money Laundering Group.

This development marks a significant departure from the previous approach, which imposed broad and blanket restrictions on NPOs. The new approach recognises the vital role NPOs play in supporting communities and driving progress.

As a result of the amendment, the National NPO Working Group on Financial Action Task Force (FATF) on January 27, in a statement urged the finance minister to expedite the issuance of statutory instruments to implement the parliamentary approval for amending Schedule 2 of the Anti-Money Laundering Act, Cap. 118.

It also requested the Financial Intelligence Authority to formally notify all NGOs that they are no longer required to file reports, submit returns, or fulfil other obligations previously imposed on accountable persons.

The group, however, is also committed to continuing to work closely with the FIA and the NGO Bureau to bridge the knowledge gap through tailored outreach programs on terrorism financing associated risk -specifically, those identified as posing high TF vulnerability- and to develop mitigation measures.

It also pledged to disseminate and promote the FATF best practices paper on combating the abuse of NPOs to all relevant NPO sector regulators to ensure effective implementation of the risk-based approach for improved oversight over the NPO sector in matters related to CFT.