NGOs Push for Swift Implementation of Anti-Money Laundering Act Amendments

The National Non-Profit Making Organization's Working Group on the Financial Action Task Force in Uganda is urging the Ministry of Finance, Planning, and Economic Development to swiftly issue the statutory instrument needed to enforce the recent amendments to the Anti-Money Laundering Act.

Last week, Parliament approved a motion to amend Schedule 2 of the Anti-Money Laundering Act, officially removing Non-Governmental Organizations (NGOs), churches, and other charitable organizations from the list of “accountable persons” in the fight against money laundering. This long-awaited move has been welcomed by the NGO sector, which has been advocating for this change for years.

The NGOs are now calling for the fast-tracking of the statutory instrument to ensure the amendments are promptly implemented. Yonah Wanzala, Director General of the Civic Advisory Hub, said that the timely issuance of the necessary statutory instrument is crucial for enforcing the changes and clarifying the new roles and responsibilities of NGOs.

Wanzala added that the amendment is expected to ease regulatory burdens on the non-profit sector, while promoting stronger collaboration between NGOs and the government in the fight against money laundering.

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Wanzala made the remarks during a press briefing in Kampala, adding that with the recent amendments, the Financial Intelligence Authority should formally notify all NGOs that they are no longer required to submit reports, file returns, or fulfill other obligations that were previously imposed on accountable persons.

Before the amendment, the Anti-Money Laundering Act of 2013 categorized NGOs, churches, and charitable organizations as accountable persons, subjecting them to the full set of Anti-Money Laundering and Countering the Financing of Terrorism regulations, including customer due diligence and reporting suspicious transactions.

In line with international best practices recommended by the Financial Action Task Force (FATF), NGOs proposed that efforts to prevent the misuse of the non-profit sector for terrorism financing should be more targeted. They recommended that only those non-profit organizations that meet the FATF’s definition, based on a thorough risk assessment, should undergo scrutiny.

With the amendments now in place, Uganda will adopt a risk-based approach to addressing terrorism financing in the non-profit sector. This means the government will focus its efforts on identifying and targeting only those specific Non-Profit Organizations (NPOs) that, according to FATF’s vulnerability criteria, are genuinely at high risk of being exploited for terrorism financing, based on comprehensive risk assessments for terrorism financing within the sector.

Robert Kirenga, the Executive Director of the National Coalition of Human Rights Defenders, said that the implications of this development are profound. “The removal of NPOs from the list of accountable persons not only acknowledges their crucial contribution to national development but also paves the way for a more collaborative and less burdensome regulatory environment for the sector,” he added.

Kirenga added that now NGO Bureau, currently a department within the Ministry of Internal Affairs, should undertake a comprehensive review of the non-profit sector. This review should focus on identifying organizations that meet the Financial Action Task Force’s (FATF) definition of Non-Profit Organizations (NPOs).

 “... A comprehensive risk assessment should be conducted for these identified NPOs. This assessment should focus on understanding the potential terrorism financing risks associated with these organizations, analyzing the specific types of risks they face, while considering factors such as their operational contexts and funding sources,” said Kirenga.

He also added that the Bureau should establish targeted, proportionate, and risk-based measures to effectively address the identified terrorism financing risks. These measures should align with the risk-based approach, ensuring that resources are allocated efficiently and based on the level of risk each organization poses.