High Court in Kampala has finally ruled that the Financial Intelligence Authority is not powered to order the freezing of any individual or organization suspected of engaging in terrorism financing.
Justice Esta Nambayo said in her ruling that “it was irregular” for FIA to freeze the bank accounts of the NGOs on “mere suspicion that they financed terrorism activities”
“In this case, therefore, I would find that the 1st respondent (FIA) committed an error of the law when it exercised its mandate of freezing the applicants’ accounts without evidence leading to its satisfaction that the applicants were financing terrorist activities,” she said,
“and as such, its actions were illegal, ultra vires, and irregular,” Justice Nambayo added
This followed a famous case that was reported by two non-governmental organizations; the Uganda Women’s Network and the Uganda National NGO Forum, where FIA issued an order in November 2020, and directed banks to freeze all accounts.
“It is hereby declared that the decision by the 1st respondent (FIA) directing the applicants’ bankers to freeze, restrict or halt all withdraws or debits from the applicants’ bank accounts was without reasonable suspicion to warrant an investigation into the allegations of terrorism financing,” Justice Nambayo stated.
Justice Nambanyo said that there must be a “proper basis” or “reasonable suspicion” before the FIA orders the freezing of bank accounts.
FIA, she said must be in a position to present that information or circumstances to court in evidence -, if called upon, for the court to see that there was genuine cause for its actions which the agency did not do. She orders FIA to pay costs.
Anti-money Laundering Bill 2022
Justice Nambanyo’s ruling comes a few days after Parliament passed the Anti-money Laundering (Amendment) Bill 2022, which Empowers FIA to take all necessary actions against suspected culprits.
Money laundering can be defined as one of the forms of Illicit Financial Flows (IFFS), which are cross-border exchanges of value, monetary or otherwise, are illegally earned, transferred, or used and they rob governments of millions of dollars a year that could otherwise be spent on vital services and development.
The government says the anti-money laundering amendment bill will help it to improve its rating which is currently dubbed “partly compliant”.
“The Anti-Money Laundering (Amendment) Bill, 2022 also gives powers to state authorities like the FIA to impose sanctions including a Shs30 million fine on a person or organization that violates the laws,” Attorney General Kiryowa Kiwanuka said recently.
The law, he said further gives responsibility to persons who have the capacity and may come into contact with suspected illicit finances to detect and prevent such a transaction from happening. “This may be in conjunction with the FIA,”
Clause 1 of the Bill places the responsibility of ensuring financial institutions or persons coming into contact with suspect finances are risk alert and develop the capacity to forestall such transactions under the supervision of FIA.
Government, according to Kiwanuka will use this new law to provide for an accountable and transparent licensing regime and also provide for the participation of host communities in the entire decision-making chain of mining.
