The Bank of Uganda issued a circular to all Payment Service Providers (PSPs) and Payment System Operators (PSOs), expressing concern about their ongoing business relationships with unlicensed digital lenders. The circular highlighted that some of these lenders have been reported to engage in predatory lending behavior, unethical collection practices, and harassment of customers.
The central bank emphasized the need for PSPs and PSOs to perform due diligence before entering into business relationships. They reminded the providers that they should only partner with licensed lenders who have received approval from the central bank.
The circular also noted that Section 6 of the Anti-Money Laundering Act, 2013, as amended, along with Regulation 18 of the Anti-Money Laundering Regulations, 2015, as amended, require financial institutions to conduct proper customer due diligence. This ensures that the financial system is not used for money laundering or other illegal activities.
The Bank of Uganda reminded the service providers that compliance with Regulation 53(2)(d) and (j) of the Anti-Money Laundering Regulations, 2015, is mandatory. These regulations specify the due diligence procedures that must be followed to prevent financial crimes.
The circular was signed by the Director of National Payments Systems, highlighting the importance of adhering to these guidelines to maintain the integrity of Uganda’s financial system. Copies of the circular were also sent to the Executive Director of the Bank of Uganda and other relevant stakeholders.
Issue to the public a list of licensed loan apps