This amendment removes Non-Governmental Organizations (NGOs), churches, and other Non-Profit Organizations (NPOs) from the list of "accountable persons" in the fight against money laundering, a move hailed as a victory for the sector.
The amendment, which revises schedule 2 of the Anti-Money Laundering Act, comes after years of advocacy spearheaded by the Defenders' Protection Initiative (DPI) and the National NPO Group on the Financial Action Task Force (FATF).
It is seen as a critical step towards creating a more favorable regulatory environment for NPOs, who play a vital role in Uganda's socio-economic development.
“This decision recognises the invaluable contribution of NPOs to national development and paves the way for a regulatory framework that better supports their growth,” said the National NPO Group in a statement.
The amendment shifts Uganda’s approach to money laundering and terrorism financing, moving away from blanket restrictions.
Instead, the government will adopt a risk-based approach, focusing on identifying and addressing terrorism financing risks in organizations that are deemed to be at high risk.
This targeted approach aims to balance security concerns with the need for a thriving civil society.
In particular, the reform removes the obligation for NGOs and NPOs to meet burdensome reporting requirements previously imposed on “accountable persons.”
This change is expected to ease the operational challenges faced by many organizations in the sector, enabling them to continue their work without excessive regulatory scrutiny.
However, the amendment does not signal a retreat from regulatory oversight.
Instead, the government will continue to monitor and assess organizations based on a risk-based model.
NGOs will still be required to meet statutory obligations with the NGO Department and the Registrar of Companies.
The move is widely seen as a turning point in the relationship between civil society and the government, fostering a collaborative atmosphere built on trust.
The National NPO Group has pledged to continue working closely with the Financial Intelligence Authority (FIA) and other authorities to mitigate risks related to terrorism financing and ensure NPOs remain accountable.
In their call to action, the NPO group urged the Ministry of Finance, the FIA, and other law enforcement agencies to expedite the implementation of the amendment and ensure that NGOs are notified of their new status.
They also called for further reflection on the NPO sector and the development of targeted measures to address specific risks associated with terrorism financing.
As part of their commitment to combating terrorism financing risks, NPOs have pledged to continue outreach programs, promote best practices, and engage in capacity-building initiatives to strengthen governance, transparency, and accountability within the sector.
This legislative change marks a significant milestone for Uganda’s civil society, reinforcing the country’s commitment to fostering a supportive environment for NPOs while addressing the risks of money laundering and terrorism financing.