Background

Non-Government Organisations (NGOs), Churches, and Charitable organisations were previously listed as “accountable persons’ under the Second Schedule of the Anti-Money Laundering Act Cap 118. Accordingly, they were required to:

a. Register with the Financial Intelligence Authority (FIA),
b. Report high-value and suspicious transactions,
c. File annual compliance reports, among other obligations.

Key Changes Introduced by the Amendment

On 5th February, 2025, the Hon. Minister of Finance, Planning and Economic Development in exercise of the powers conferred on him by Section 142 of the Anti-Money Laundering Act issued Statutory Instrument 2025 No. 17 cited as “The Anti-Money Laundering (Amendment of Schedule 2) Instrument, 2025”. This amendment:

a. Repealed paragraph 15 from the second schedule of the Anti Money Laundering Act, delisting NGO’s, Churches and Charitable Organizations as accountable persons.
b. A notice of the instrument was published in the Uganda Gazette Vol. CXVIII NO.11 on 14th February, 2025, bringing the amendment into force.

Implications of the Amendment

The amendment means:

a. NGO’s, Churches and Charitable Organisations are no longer subject to FIA supervision for Anti Money Laundering/Countering the Financing of Terrorism/Countering Proliferation Financing (AML/CFT/CPF) related matters.
b. They no longer need to:
i. Register with FIA
ii. Comply with the transaction or annual reporting requirements.
iii. Present an FIA Certificate for registration/renewal with the NGO Bureau.

Impact of the Amendment

a. Reduced regulatory burden. NGOs and charitable bodies will face fewer compliance obligations, reducing administrative costs and operational hurdles. Many NGOs have been struggling with compliance, particularly in reporting high-value transactions, as the threshold was set so low that over 70% of the transactions often required reporting. The amendment alleviates this burden.
b. Potential risks in AML/CFT Oversight: Uganda was removed from the Financial Action Task Force’s (FATF) grey list in early 2024, which reflected progress in combating money laundering and terrorism financing. However, this exemption removes formal monitoring of NGOs, churches and charitable organisations, potentially increase vulnerability to financial misuse or terrorism financing risks, especially with Uganda’s general elections approaching in early 2026. In consideration of the above, the FIA and NGO Bureau are currently undertaking a risk assessment for the NPO sector. The findings will determine whether high-risk NPOs must implement additional safeguards against terrorist financing abuse.

Recommendation for NGOs & Charitable Organisations

Despite the exemption, NPOs should:

a. Adhere to the requirements of Recommendation 8 of FATF standards, which aims at protecting NPOs from Terrorist Financing (TF) abuse so as to mitigate terrorist financing risks.
b. Implement robust internal AML/CFT Policies. Now is not the time to relax compliance but to strengthen measures to preserve donor and regulator trust.

Conclusion

The amendment has been widely welcomed by the NPO Sector as it reduces a significant regulatory burden. However, the potential risks, particularly concerning AML/CFT oversight, must be closely monitored. NGO and Charitable organisations can safeguard themselves against vulnerabilities while benefiting from streamlined compliance once they adopt the recommended measures.