The efficacy of legislation on reporting suspicious transactions by banks in Uganda

Abstract

In Uganda, commercial banks have largely not complied with the obligation of reporting suspicious transactions. A mixed method based on evolutionary game theory approach has concluded that administrative sanctions and modern technologies could enforce compliance with the obligation of reporting suspicious transactions. In addition, it is established that poor remuneration and inadequate resources of enforcement agencies affects the combating of money laundering. Furthermore, it is concluded that the Supervision Department of Bank of Uganda is not free of compromise in executing its mandate of supervising commercial banks, and there is a general problem within the bank sector of appreciating what constitutes a “suspicious transaction”. This study has revealed that having a documented and approved anti-money laundering policy and an independent audit function that carries out testing and review of the compliance programs in commercial banks is a vital measure for combating money laundering. Finally, no case of suspicious transaction has been investigated and prosecuted in courts of law, and no assets have been confiscated. This study was limited by data in relation to statistics of suspicious transaction reports (STRs) disseminated by Financial Intelligence Authority to other competent authorities hence their precise value could not be ascertained. In consideration of the foregoing factors, the efficacy of legislation on reporting suspicious transactions by banks in Uganda is lacking. It is hoped that the recommendations made will go a long way in improving the reporting legal regime.