AMLCO’S TRAINING FOR INSURANCE PLAYERS ORGANISED

BY
Insurance Training College

Presentation by: Ms Phionah Nabaggala

Manager Training and Outreach Financial Intelligence Authority

Topics covered.
1. Role of FIA.
2. Definition of key terms ML/TF
3. Anti Money Laundering Legal Regime.
4. Typologies in the insurance sector
5. AML/CFT Measures/ obligations
6. Suspicious transactions in the insurance sector
7. Offences.
8. Penalties.

THE FINANCIAL INTELLIGENCE AUTHORITY

The Financial Intelligence Authority (FIA) is a gov’t agency established under
section 18 of the Anti-Money Laundering Act (AMLA), 2013 to combat Money
laundering and Terrorist Financing in Uganda.
• The FIA works with other LEAs to protect the financial sector from being
abused by criminals seeking to launder proceeds of crime or fund
terrorist activities.
• FIA’s functions place it at pivotal point between the reporting entities
and supervisory bodies, and law enforcement agencies and prosecutors.

MONEY LAUNDERING & TERRORISM FINANCING

A) Money Laundering (ML).
ML. is the process by which criminals conceal the true origin and ownership of the
proceeds derived from criminal activities so that they appear to have originated from
Legitimate sources. In other words, it’s a process by which criminals make “dirty” money
appear “clean”. When criminals get money from illegal activities, do not want to be
known by Law enforcement agencies. They therefore must find ways to conceal, disguise
the illicit proceeds.

Money laundering offence is a secondary offence resulting from the involvement of

handling the proceeds of crime. ML involves the movement & “washing” of large illicit
proceeds or profits generated from:
a) Drug trafficking
b) Corruption &Embezzlement
c) Fraud and Counterfeiting
d) Human Trafficking & smuggling
e) Arms, antiques, gold smuggling
f) Prostitution rings
g) Financial frauds
h) Tax Evasion, or
i) Illegal sale of wild life products and other predicate offences etc.

Stages of Money Laundering

There are basically 3 stages i.e;
 Placement,
 Layering and,
 Integration
Placement: This involves the introduction of proceeds derived from illegal activities into
the financial system. Proceeds (funds) are moved from the scene of crime to a place or
into a form, less suspicious and more convenient for the criminal or brought into
circulation through financial institutions, Insurance Companies, casinos, Real Estate etc.

Layering: This stage involves Conversion of the proceeds of crime into another form and
creating complex layers of financial transactions to disguise the audit trail, source and
ownership of funds.

Integration: Represents the conversion of illegal proceeds into apparently legitimate

business earnings through normal financial or commercial operations. At This stage
tainted money is comingled with other legitimate Assets and it’s extremely difficult to
tell the origin or distinguish “dirty” from clean Assets.

B) Terrorist Financing (TF)

Means fundraising for, or providing financial support to organizations or persons
involved in terrorism.
This involves funds intended to finance an act of terrorism. The links between terrorist
groups and organised criminal gangs which involve converting, transferring, handling,
acquiring, possessing or using the property that is the proceeds of criminal conduct.
The money frequently starts out clean e.g as a ‘charitable donation’ before moving to
terrorists.

C) Proliferation Financing
Proliferation of weapons of mass destruction (“WMDs”) can be in many forms, but
ultimately involves
(a) The transfer or export of technology
(b) Goods
(c) Software,
Services or expertise that can be used in programs involving nuclear, biological or
chemical weapons, and their delivery systems (such as long range missiles).
Proliferation of WMD financing is an important element and, as with international
criminal networks, proliferation support networks may use the international financial
system to carry out transactions and business deals.

Scale of the problem

Due to its stealthy nature, the global scale of money laundering is difficult to measure,
but it is considered to be significant. The United Nations Office on Drugs and Crime
(UNODC) estimates that between 2 and 5% of global GDP - up to 1.87 trillion Euros – is
laundered each year.

A Country like Uganda could be losing up to 5% of its GDP to Launderers. In 2021,

Uganda’s GDP was estimated at USD 40.53 billion. This would translate between USD
0.81 billion to
2.02 billion laundered annually.

ANTI MONEY LAUNDERING LEGAL REGIME

Legal framework for AML/CFT
There are both domestic and international legal frameworks that have been set up to curb
and completely eradicate money laundering, as noted below.
a) International Standards
 FATF Recommendations and the Immediate Outcomes.
 UN conventions
 UN Conventions and Security Council Resolutions
 Vienna Convention – 1988 (illicit trafficking in drugs & psychotropic substances)
 Palermo Convention – 2000 (Transnational organized crime) – Article 7.
  Merida Convention – 2003 (UNCAC) – Article 14
 International Convention for Suppression of TF – 1999 ; Article 18

b) Domestic Laws
 Anti Terrorism Act, 2002 Anti Terrorism Amendment Act, 2015, 2017, 2022. Anti
Terrorism Amendment Regulations, 2023
 Anti Money Laundering Act, 2013 (as amended), Anti Money Laundering
Amendment Regulations 2023
 Other pertinent Laws e.g Financial Institutions Act, Insurance Act, Capital
Markets Authority Act,. NGO Act.
National Risk Assessment

Sectors Risk Score

Banks High
Securities Medium
Insurance Medium
Real Estate High
Casinos High
Lawyers High
Accountants, Auditors, Tax Advisors Medium-Low
Dealers in Precious Metals & Stones (DPMS) High
Money Value Transfer Services (MVTS) High
Forex Bureaus Medium
Virtual Asset Service Providers (VASPs) Sectors High
Savings and Credit Cooperatives (SACCOs) Medium-High
Tier IV Institutions (Credit Only MFIs and Private Money Medium
Lenders)
Microfinance Deposit - Taking Institutions (MDIs) Medium

Money Remitters /Money Service Businesses (MSBs) Medium

Financial Action Task Force (FATF)

This organization was formed in 1989 to led international effort to combat ML/TF and
other threats to the global financial system. It has produced the FATF 40
Recommendations which are global minimum standard for an effective AML system for
all countries. FATF develops, promote policies, and monitor implementation of the
standards for purposes of combating ML/TF both at national and international level.
Failure to implement the standards adequately can result into a broad application of
sanctions.
 ML TYPHOLOGIES IN THE INSURANCE SECTOR
•Single premium insurance policies where launderers can pour a sum of money into a
single transaction in order to protect the funds gained via illegal conduct.
•Insurance products are another opportunity for fraudsters to launder illegal gains.
(Insurance fraud) for example health insurance. There AML compliance program’s
overall effectiveness is the responsibility of the insurer. There are no associated controls
for intermediaries
•Annuity products are prone to ML risks. They have high regular premium savings
which are loopholes to allow criminals to receive legitimate income after paying the
premiums with illegal funds.
•Refund premiums. During the cooling-off period, money launders will purposefully
overpay premiums, forcing insurers to directly reimburse them.
•Policy surrender. To regain possession of funds, money launderers can surrender the
policy for a penalty.
•Policy loans: Once a substantial amount of funds is paid, money launderers can take
out loans on their life policy. These loans use the cash amount in the account as collateral.

AML/CFT MEASURES/ OBLIGATIONS

WHAT INSTITUTIONS ARE COVERED BY AMLA
AMLA lists Accountable persons to include all Insurance Companies, and have specific
obligations by law to file the following reports to FIA.

Advocates

NGOs,Churches Trust
Companies
All
Licensing

Uganda Real

Authority

Dealers in

Stones

Company
Companies

Firms
Companies
These organs must report to FIA for;
 Large Cash and Monetary Transactions Reports.
 Suspicious Transactions Reports
 Cross boarder declarations of cash & BNI

OBLIGATIONS OF ACCOUNTABLE PERSONS

All Accountable persons including Insurance Companies have specific obligations and
must have internal policies and procedures to reflect the requirements of the law in
relation to the following areas:

1.Customer due diligence

2.Reporting.
3.Record keeping.
4.Internal procedures.
5.AML/CFT training

CUSTOMER DUE DILIGENCE- CDD

What does Client due diligence Mean?
 Identify & verify the customer.
 Identify & verify the beneficial owner (An individual who ultimately owns or
controls the customer and/or on whose behalf a transaction or activity is
conducted).
 Establish purpose & intended nature of business relationship (a business,
professional or commercial relationship between the designated person and the
customer that the designated person expects to be ongoing).
 Monitor customer dealings on an on-going basis.

Purpose & intended nature of the business relationship

In most cases this will be self evident e.g.
•Investing in a life policy
Ongoing monitoring involves.
 Scrutinize transactions
 Source of wealth or funds
 Consistent with knowledge of customer and the customer’s business and pattern
of transactions

For Legal persons, you must establish who the Beneficial Owner is while establishing a
business relationship.R.25 AML,2015
For a Company it could be an Individual holding more of shares or voting rights.in
partnership it could be An Individual holding eg 25% or more of profits or capital or
voting rights, for Trusts it could be an individual with more capital or has control over a
trust or an Executor in an Estate

The law stipulates when and how CDD is carried out.

It allows Accountable persons to apply aspects of the customer due diligence
requirements
on a risk-sensitive basis depending on: R.18(5)
a) The nature of the product being sold;
b) The delivery mechanism or distribution channel used to sell the product;
c) The profile of the customer; and
d) The customer’s geographical location and source of funds

USE OF THIRD PARTIES REGULATION 16 AMLA, 2015

When an Insurance Company or any other Accountable Person uses a third party to
deliver any product or service offering on its behalf the obligation to ensure that AML/
CFT measures are put in place stays with the Accountable Person.

An Accountable person is permitted to rely on another reporting person to identify and

verify its customers for AML purposes. Accountable persons who rely on third parties
will remain liable for any failure to comply not withstanding their reliance on the third
party.

Prior to carrying out any service for the customer, if you have reasonable grounds to
believe that there is a real risk that the customer is involved in money laundering/
terrorist financing (ML/TF).

If you have grounds to doubt the veracity of documents provided by the client. The
Accountable person must report to the FIA.

CATEGORIES OF CUSTOMER DUE DILIGENCE

These are;
 Simplified Customer Due Diligence
 Enhanced Due Diligence
Simplified Customer Due Diligence (SCDD) R.15
This applies to low-risk customers and products; it means that a designated person does
not need to comply with the CDD obligations. You must however obtain sufficient
information about the customer to satisfy that the customer meets the criteria for
Simplified Due Diligence eg
 a public Body, a listed company
 Pension or similar schemes which provide retirement benefits to employees,
where contributions are made by an employer or by way of deduction from an
employee’s wages and the scheme rules do not permit the assignment of a
member’s interest under the scheme.
 Standard Due Diligence must be applied to all remaining customers and products.

Enhanced Due Diligence

Enhanced Due Diligence applies in respect of a business relationship or transaction with
Politically Exposed Persons (PEP’s) or other high-risk clients as guided by the law or your
internal Company policy on AML/CFT.

A “PEP” is an individual is a person whether resident or a foreign who has been entrusted
with prominent public functions or an immediate family member or a known close
associate of such a person.
A person is a PEP if they held a relevant office or as otherwise defined in the AMLA.
Accountable persons must have processes in place prior to establishing a business
relationship with a customer to determine whether the person may be deemed to be a
“PEP”.
To determine a PEP, requires senior management approval to establish a business
relationship with a “PEP” to take measures to establish the source of wealth and funds
for transactions.

SIMPLIFIED CUSTOMER DUE DILIGENCE -CDD

Applied on a risk based approach. R.15AMR,2015
1. Profile of the customer
2. Nature of product or service
3. Distribution channel
4. Geographical area of operation.

There are products due to their inherent features which are unlikely to be used as a
vehicle for ML purposes. These are usually classified as “Low Risk”.

The following features would indicate low risk:

 Only pays out on death or diagnosis of terminal illness of policy holder.
 Only pays out on medical evidence and proof is required as to loss of income.
 No surrender value.
 Small, regular premiums: additional payments by customer not possible.
 No investment element.
 Once term of policy is finished no payout and policy ceases etc.

USE OF RISK BASED APPROACH

Different Accountable persons use different mechanisms to profile and risk rate their
clients from Low, Intermediate to High.

The purpose of this rating is to guide application of resources for purposes of AML/CFT
compliance.

For High Risk. This level of risk has is given to products whose inherent features allow
for the possibility of them being used for ML purposes. These products have the facility
for third party and/or “top up” payments and therefore an enhanced level of due
diligence, by asking for more information, is appropriate.
CDD REQUIREMENTS
This is the risk level that the majority of a Accountable person’s AML resources will
normally be directed. The majority of products in this range are found in the investment
category which reflects the Higher value premium that can be paid into them.

Natural persons:
Identification of a personal customer is the process whereby a designated person obtains
from a customer the information necessary for it to identify who the customer is.

The identity of an individual has a number of aspects at any point in time, all of which
must be obtained by the Accountable person: R.19AMLR,2015
1. Name (which may change due to particular events);
2. Address (which is likely to change from time to time); and
3. Date of birth (which is a constant)

KYC CLIENT IDENTIFICATION

Obtain one item from the list of photographic IDs (to verify name and date of birth) and
one item from the list of non-photographic IDs (to verify address) at the outset of the
business relationship.
Sources which can be used to verify identity are:
 Current valid Passport
  Current valid driving license.
 Current valid National Identity Card.
In the absence of the above documents, written or otherwise documented, assurances
from persons or organization’s that have dealt with the customer for some time may
guide how treat the client
An Accountable person might consider it appropriate to adopt an alternative approach
of identification such as seeking a social welfare card, Refugee Card etc, off an individual
who has recently immigrated into the Uganda.

KYC FOR LEGAL PERSONS & SIMILAR ARRANGEMENTS

Dealing with Legal persons can be tricky, Launderers like hiding behind legal persons
to hide their Identity.
Accountable persons must find who the real beneficial owner is.R.25 AMLR,2015
It could be Directors, Board Members, executive or the equivalent, for example:
Partnerships and unincorporated businesses, Clubs, Societies, Public Sector bodies.

Identification can generally be satisfied by either: R.22 AMLR2015

 Obtaining a copy of the annual audited accounts listing directors (where the
necessary information is publicly accessible and considered by the firm to be
current and reliable) or
 Obtaining relevant and up-to-date Annual Returns from a reliable source
documenting due diligence conducted, in relation to information on directors.
 Obtaining information from relevant company or other registry such as the URSB
or known foreign equivalent.

To identify the legal arrangement: The following could be done.

 A search from URSB or other registry (where the necessary information is publicly
accessible and considered by the firm to be current and reliable) or
 A copy, as appropriate to the nature of the entity, of the certificate of incorporation;
a certificate of registration, a partnership agreement; a deed of trust or other official
documentation proving the name, form and current existence of the customer.
 In cases regarded by the firm as higher risk, use of more than one source of
information may be warranted.

CDD REQUIREMENTS FOR LIFE INSURANCE. R.25

In addition to the customer due diligence measures required, ensure that the beneficiary
of the life or other investment related insurance business is capable of being identified.
Take reasonable measures to determine whether the beneficiary of a life insurance policy
is a politically exposed person, in any case the identification shall be done before the
proceeds are paid.

Payee of the insurance policy is not a customer, an insurer shall identify the payee and
verify his or her identity before making any of the following payments
 Payment of the sum assured or part of the sum, upon the occurrence of the risk
insured against in accordance with the policy;
 Payment of the surrender value of the insurance policy;
 Refund of premium upon the avoidance, cancellation or termination of any
insurance policy; or
 Refund of any other payment made in relation to any insurance policy.

Not to be required to inquire if there exists any beneficial owner in relation to a customer,
where the customer is—
(a) a government entity;
(b) a foreign government entity and is not sanctioned or blacklisted by the United
Nations and other relevant international body;
(c) an entity listed on the securities exchange in Uganda;

Not be required to inquire if there exists any beneficial owner ;

(a) An entity listed on a securities exchange outside of Uganda that is subject to
adequate regulatory disclosure requirements;
(b) A bank or any other financial institution supervised by the Central Bank, the
Capital Markets Authority or the Uganda Insurance Regulatory Authority;
(c) A beneficiary of a pension, superannuation or similar scheme that provides
retirement benefits to employees, where contributions are made by way of
deduction from wages and the scheme rules do not permit the assignment of a
member‘s interest.

Where there is a high risk identified, an accountable person shall in addition to the
required customer due diligence measures—
 Inform senior management before the payout of the policy proceeds;
 Conduct enhanced scrutiny of the whole business relationship with the policy
holder; and
 File a suspicious transaction or activity report with the Authority.

Not be required to inquire if there exists any beneficial owner;

  A beneficiary of a life insurance policy, where the annual premium is not more
than the amount of one million five hundred thousand (Ugx 1,500,000) Uganda
Shillings or its equivalent in foreign currency or a single premium of not more
than the amount of four million (Ugx 4,000,000) Uganda shillings or its equivalent
in foreign currency;
 Beneficiary of an insurance policy for pension schemes where there is no surrender
clause and the policy cannot be used as collateral; or

RISK ASSESSMENT. REGULATION 8 AMLA, 2015

Every Accountable person must undertake and document a comprehensive risk
assessment of the business, it should demonstrate that all potential Money Laundering/
Terrorist Financing risks pertinent to their business have been fully considered and
Mitigation measures put in place such as:
 The nature of the products being sold in the firm.
 The delivery mechanism or distribution channel used to sell the product
 The profile of the customer
 The customer’s geographical location and source of funds
 The outcome of the risk assessment should inform the firm’s risk-based approach
and the design of AML/CTF controls.
 The firm’s risk assessment should be subject to regular and scheduled reviews,
senior management must at least on an annual basis review and approve this risk
assessment.

MONITORING
 Always ensure effective on-going monitoring policies and procedures are in place
including full review and consideration of all trigger alerts.
 Undertake monitoring on an ongoing basis to uncover unusual or suspicious
activity to ensure that higher risk activity is scrutinised and addressed.

In practice, for Insurance Companies this might occur where there is an early surrender
of a policy, or where the payer of the policy changes.
(i) A customer who usually purchases small policies, suddenly requests a large
lump-sum contract without corresponding business activity.
(ii) Purchasing one or more single-premium investment-linked policies, then
cashing them in a short time later.
(iii) Customer insisting on anonymity, reluctance to provide identification
information, or providing minimal and seemingly fictitious
Employees should be adequately trained to identify such unusual business and report
to the designated person’s Money Laundering Reporting Officer (AMLCO).
  For example, employee training should cover common or newly identified risks
such as fraud attempts eg the use of Encashment in other markets or client requests
via email
 Where an encashment request is received, it is recommended to take additional
measures to ensure the request is genuine, for example
 Phone the client to confirm the details/instruction
 Cross reference proof of ID and residency with existing proof of identity and
residency on file

FAILURE TO OBTAIN CDD

Where an Accountable person cannot establish the identity of a customer and/or
beneficial owner, as a result of the failure of the customer to provide the relevant
documents of information required, then an Accountable must:
 Not provide a service to the customer, and
 If an existing customer, must discontinue relationship with the customer.
 Or as otherwise advised by senior management in relation to the Internal
AML/CFT policy and the AMLA .

INTERNAL CONTROLS .R.11AMLR.

 Monitoring systems for complex, unusual or large transactions or suspicious
activities
 Enhanced due diligence measures for high-risk clients
 Monitoring systems for persons in high-risk jurisdictions
 Training programs
 Awareness programs
 Maintenance of a manual
 Carry out an audit

INTERNAL PROCEDURES AND POLICIES.R.11AMLR.

• Senior Management are obliged to ensure that every Accountable person has
procedures and controls in place to demonstrate compliance with all aspects of the
AML Act and approve them.
• Senior Management must have a clearly defined process in place for the formal
review and approval, at least annually, of the policies and procedures at
appropriate levels.
• Management must clearly set out all approved policies and procedures to enable
staff to apply them in practice and ensure that all staff adhere to them.
• All procedures should be compliant with the FIA and regulators core and sectoral
guidance notes.
PROCEDURES AND POLICIES
These internal policies and procedures should include:
• Measures to be taken to keep documents and information relating to customers up
to date.
• Additional measures to be taken where there are reasonable grounds to believe
that the circumstances relating to a customer, beneficial owner, service, product or
transaction may present a heightened risk of ML/TF.
• The Insurance company/ player shall, in respect of that customer or beneficial
owner, apply additional measures (EDD).
• Measures to be taken to prevent the use of money laundering or terrorist financing
of products/transactions that could favour or facilitate anonymity.
• Monitor customers and transactions against both the EU and UN Sanctions
Committee lists relating to terrorism.

RECORD KEEPING REGULATION 28, 42 AMLA 2015

Accountable Persons are required to keep records evidencing the procedures applied and
the information obtained, when carrying out CDD on customers for a period of at least
10 yrs after the business relationship with their customer has ended.

Record keeping is an essential part of the evidence trail and sufficient processes must be
put in place to ensure that records are adequately kept.

Maintenance of Records in a form that can enable the entity to comply with requests for
information. This information kept must enable the transaction to be reconstructed when
need arises and these records should not be maliciously altered

STAFF TRAINING
• Accountable persons must ensure that all staff receive on-going training in relation
to their AML and combating of terrorist financing obligations.
• Staffs should receive tailored training to reflect their role within the firm.
• Training should be consistent with firm’s policies & procedures, risk assessment
done by the firm (Not Generic trainings)
• A formal training schedule should be developed and maintained to ensure all
relevant staff are adequately trained at least annually.
• Adequate records in relation to staff training should be retained for all internal &
external courses attended and be kept

REPORTING OBLIGATIONS
Monitoring and reporting suspicious activities. (STRs).R.39
Insurance companies including Agents and brokers have a responsibility to monitor
customer activity for any suspicious financial activities.
• Must monitor and report suspicious transactions in Form B as soon as after
forming the suspicion but not later than two working days. This should be
submitted to the FIA with documentation forming the basis of the suspicion.
• Recording and Reporting cash and monetary transactions exceeding 1,000
currency points (20,000,000/=) in form A to the FIA.
• Multiple cash and monetary transactions which all together exceed the prescribed
amount and are undertaken by or any one person in one day shall be treated as a
single transaction

REPORTING
Accountable Requirement to have a documented internal reporting process for staff to
report a suspicious transaction - it should provide guidance on how to complete and
submit such reports.
• There should be documented timelines set by the Insurance Company in relation
to the filing of the Suspicious Transaction Reports (STR).
• Staff reports must be made to the Money Laundering Reporting Officer (AMLCO)
when the staff member knows, suspects or has reasonable grounds to suspect that
ML or TF is being or has been committed or attempted
• If the AMLCO decides an external report needs to be made to the FIA, The
following information should be contained in the report:
(a) The information on which the Accountable person’s knowledge,
suspicion or reasonable grounds are based;
(b) The identity of the suspected person;
(c) The whereabouts of the property that is the subject of the Money
laundering or the funds that are the subject of the Terrorist financing;
(d) Any other relevant information.

REPORTING STRS.R.39 AMLR,2015

• You must not disclose to the customer concerned or other third persons that a
report has been made to the FIA in relation to suspicions ML/TF.
• Accountable persons, employees and directors are legally prohibited from tipping
off.

Filing Annual Compliance Report (ACR) 45 AMLR,2015

• Accountable person is required to file an annual compliance report to FIA by 31st
January of every calendar year
 • Regulation 45 requires ana accountable person to conduct an independent audit
on AML to assess the effectiveness of the AML/CFT controls in place

ROLES OF ANTI MONEY LAUNDERING COMPLANCE OFFICER

AMLCO R.R6 & 7 AMLR, 2015
AMLCO has a significant degree of responsibility and should be familiar with relevant
aspects of the Act and the different guidelines.
(i) He/she is required to determine whether the information or other matters
contained in the suspicious transaction he/she has received, via any internal
reporting procedure, merit the making of a report to the FIA
(ii) Maintenance of a log of any suspicious transactions, including details where it
was decided not to make a report to FIA. The reasons for not doing so should
be recorded.
(iii) That relevant staff/departments assess ML/TF risks when introducing new
technologies/ Service offerings.
(iv) Training Compliance Officers if required (eg for branches and subsidiaries
(v) Ensuring that the Insurance company has AML/CFT Policy and is regularly
updated.
(vi) Training staff on AML /CFT issues
(vii) Ensuring Proper record keeping in line with the AMLA

INDICATORS OF SUSPICIOUS TRANSACTIONS IN THE SECTOR

Recognizing suspicious transactions and ongoing monitoring
Agents will establish and implement measures to detect suspicious transactions and take
all the necessary steps to prevent them. The following are guidelines on what could
constitute an unusual transaction that requires further investigation.
These may not be ML or TF activities, but management and staff are required to exercise
judgment and enhanced CDD measures while dealing with the client.
• Client lacks general knowledge of the industry claiming to be involved in.
• Client has multiple accounts under single or multiple names for no apparent
business purpose.
• Client, or a person/entity publicly associated with the client, has a questionable
background, including prior criminal, activity or court cases.
• Clients who do not reveal sources of funds.
• More than one client shares the same address

Business origination phase

• Client is not willing to provide the required information and or exhibits unusual
concern to secrecy.
• Client requests to waive documentation standards.
 • Failure to submit annual returns
• Clients with huge premium payments
• Clients whose payment of premiums are via offshore banks
• Transactions with undisclosed party.
• Policy holders signing the same type of life insurance policies for different
beneficiaries.
• Policy holders who make single premium investment then cashing them out in a
short time.
• Clients who over pay a policy then ask for repayment.
• Clients that purchase surrender policies
• Clients have purchase high premium endowment policy
• Clients who do not reveal sources of funds.
• More than one client shares the same address

Other indicators also include;

(i) Agent fails to obtain CDD documentation or has clients who waive
documentation standards
(ii) Dealing in transactions which are inconsistent with their profiles
(iii) Making un usual transactions via off shore banks
(iv) Making frequent unusual complex transactions to different countries which
are high risks
(v) Making transactions to members who have no attachment to the company in
terms of the control structure attachment or non-relatives.
(vi) Clients who are politically exposed persons and no information on their source
of wealth was obtained, no senior management approval obtained
(vii) Company with a big number of foreign customers from high-risk countries

FEEDBACK FROM FIA AML/CTF INSPECTIONS

FIA has identified number of issues during Inspections including:
a) Insufficient evidence that all staff, including those in key roles relating to
AML/CTF, had received appropriate training.
b) Training records were not always maintained to demonstrate who had received
the training, when the training took place and the nature of the training received.
c) In some of the large Institutions, staff members were provided with generic
AML/CTF training, limited or no specific training related to the AML/CTF
procedures and processes relating to the institutions profiling.
d) Policies and procedures that are not aligned to, and reflective of, the Ml/TF risk
assessment of the FI.
 e) Such assessments should be updated regularly and reflect any changes in
products or services offered e.g. new Product offerings with increased risk may
require Simplified or EDD to be carried out.
f) Policies and procedures were not always adhered to in practice.

THE OFFENSE OF MONEY LAUNDERING

A person commits the offence of ML if the person knowing or having reasonable grounds
to believe that any property in whole or in part, directly or indirectly represents proceeds
of crime.

Converts or transfers that property for the purpose of concealing or disguising the illicit
origin of the property or;

Assisting any person who is involved in the commission of the crime to evade the legal
consequences of his actions. Conceals or disguises the true nature, source, location,
disposition, movement rights with respect to or ownership of that property.
Section Offence
1 Section 117 Tipping off
2 Section 118 Falsification, concealment, etc of documents

3 Section 119 Failure to identify persons

4
Section 120 Failure to keep records
5
Section 121 Facilitating money laundering
6
Section 122 Destroying or tampering with records
7
Section 123 Refusal, omission, neglect or failure to give
assistance
8 Section 124 Failure to report cash transactions
9 Section 125 Failure to report suspicious or unusual transaction

10 Section 126 Failure to report conveyance of cash into or out of

Uganda

PENALTIES
For breach of s3 & s116(1)
(A) Natural Persons
Fine <= 100,000 curr. Pts (UGX 2,000,000,000) or Imprisonment  15 years Or both.
(B) Legal Persons
Fine <=200,000 curr. Pts (UGX 4,000,000,000)

All other offences mentioned above;

 (C) Natural Persons
Fine <= 33,000 Curr. Pts (660,000,000/=) or Imprisonment  5 yrs Or both
(D) Legal Persons
Fine <= 70,000 Curr. Pts (1,400,000,000/=)
If its continuing offence, Fine 5,000 Curr. Pts per day the offence continues
(100,000,000/=)
 Maximum
Breach Regulation currency Amount (Ugx)
point
Failure to provide continuous training of employees, managers anddirector (natural person) R.11(6)(b) 500 10,000,000

Failure to carryout due diligence (corporate person) R.17A(a) 25,000 500,000,000

Failure to carryout due diligence (natural person) R.17A(b) 5,000 100,000,000

Penalty for contravention of regulations 18, 19, 20, 21,22, 23, 24, 25, 26and 27 (Corporate person) R.27A(a) 25,000 500,000,000

Penalty for contravention of regulations 18, 19, 20, 21,22, 23, 24, 25, 26and 27 (natural person) R.27A(b) 5,000 100,000,000

Failure to keep records (corporate person) R.28(7)(a) 3,750 75,000,000

Failure to keep records (natural person) R.28(7)(b) 3,750 75,000,000

Failure to implement appropriate risk management systems to determine whether a person or customer is a PEP R.29(5)(a) 12,500 250,000,000
(corporate person)
Failure to implement appropriate risk management systems to determine whether a person or customer is a PEP R.29(5)(b) 5,000 100,000,000
(natural person)
Failure to ensure that its foreign branch or subsidiary apply due diligence measures and other measures relating R.30(5)(a) 12,500 250,000,000
AML/CFT (corporate person)

Failure to ensure that its foreign branch or subsidiary apply due diligence measures and other measures relating R.30(5)(b) 5,000 100,000,000
AML/CFT (natural person)
Failure to undertake the measures before establishing correspondent financial business relationship (corporate R.31(4)(a) 12,500 250,000,000
person)
Failure to undertake the measures before establishing correspondent financial business relationship (natural R.31(4)(b) 5,000 100,000,000
person)
Failure to develop and update on a regular basis a written risk-based customer acceptance policy for ongoing R.32(4)(a) 6,250 125,000,000
business relationships or single transactions (corporate person)
Failure to develop and update on a regular basis a written risk-based customer acceptance policy for ongoing R.32(4)(b) 1,250 25,000,000
business relationships or single transactions (natural person)
Penalty for breach of regulations 33, 34, 35, 36 and 37 (corporate person) R.37A(2)(a) 12,500 250,000,000

Penalty for breach of regulations 33, 34, 35, 36 and 37 (natural person) R.37A(2)(b) 250 5,000,000

Failure to establish the legitimacy of the source of funds and transactions involving a person or customer R.38(4)(a) 6,250 125,000,000
(corporate person)
Failure to establish the legitimacy of the source of funds and transactions involving a person or customer (natural R.38(4)(b) 250 5,000,000
person)
Failure to report suspicious activities and certain cash transactions (corporate person) R.39(5)(a) 37,500 750,000,000

Failure to report suspicious activities and certain cash transactions (natural person) R.39(5)(b) 12,500 250,000,000

Failure by the supervisory authority to report suspicious activities R.40(3) 25,000 500,000,000

Failure to maintain records for a minimum of 10 years (corporate person) R.42(9)(a) 2,500 50,000,000

Failure to maintain records for a minimum of 10 years (natural person) R.42(9)(b) 5,000 100,000,000

Failure to carry out periodic independent audits to assess its compliance with the requirements of the Act and R.43(3)(a) 6,250 125,000,000
Regulations (corporate person)
Failure to carry out periodic independent audits to assess its compliance with the requirements of the Act and R.43(3)(b) 1,250 25,000,000
Regulations (natural person)

Failure to apply measures in respect of a person or customer from, or transactions involving, high risk countries R.44(4)(a) 5,000 100,000,000
(corporate person)