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FINANCIAL INTELLIGENCE AUTHORITY CONDUCTING INSPECTION OF LEGAL PROFESSIONALS

30 March,2021 - BY admin

FINANCIAL INTELLIGENCE AUTHORITY CONDUCTING INSPECTION OF LEGAL PROFESSIONALS

According to Section 1 of the Anti-Money Laundering Act, 2013, an accountable person means any person listed in the second schedule to the Act. Paragraph one of the second schedule to the Act mentions both Advocates as defined in the Advocates Act and Notaries licensed and certified under the Notaries Public Act among others.

This is basically because legal professionals operate within a broad spectrum of business structures that vary from country to country and even within a country. Ranging from sole practitioners to multinational firms, they provide a vast range of services. Given the diversity in scale and activities, some legal professions may be more vulnerable to being exploited for money laundering (ML) and terrorist financing (TF) than others.

This highlights the need for a sound assessment of the ML/TF risks that legal professionals face so that the policies, procedures, and initial and ongoing client due diligence (CDD) measures can mitigate these risks. This risk-based approach (RBA) is central to the effective implementation of the FATF Recommendations to fight money laundering and terrorist financing.

The FATF developed the 2019 Guidance for a risk-based approach for legal professionals with significant input from the legal profession, including through public consultation in March 2019, to ensure that it reflects their practical expertise and good practices.

The FATF guidance is intended to help Lawyers combat money laundering, recognizing that legal professionals are gatekeepers to the legal and financial system. It takes a broad approach because it is aimed at a global audience. The FATF states that the purpose of the Risk-Based Approach Guidance for Legal Professionals is to:

  • “Support the development of a common understanding of what the risk-based approach involves.
  • Outline the high-level principles involved in applying the risk-based approach.
  • Indicate good practice in the design and implementation of an effective risk-based approach.”

 

It is on this basis that the FIA has the powers to carry out on-site inspections of accountable persons falling under its purview. This is clearly stated under Section 21 (l) of the Anti-Money Laundering Act, 2013, which states that the Authority may do all that is necessary or expedient to perform its functions effectively, and in particular—in accordance with the provisions of this Act enter the premises of any accountable persons during ordinary business hours to inspect for compliance with provisions of this Act.

It may examine; audit books, direct its accountable person to produce documents, take copies/extracts from documents relevant to the inspection and retain documents. The FIA has to be given full and free access to records/other documents deemed relevant to the inspection.

Part VII of the Anti-Money Laundering Act, 2013 provides for offences and penalties and these include among others, Intentional obstruction of a regulatory body in the performance of its duties under Section 131 of the Anti-Money Laundering Act, 2013 is an offence; and the accountable person may on conviction, be liable to a fine not exceeding UGX 660,000,000 and to imprisonment for a term not exceeding 5 years.

With the ongoing inspections, the FIA aims to support legal professionals in the design of effective measures to manage their ML/TF risks, when establishing or maintaining business relationships, In particular, the obligation for legal professionals to identify and verify beneficial ownership information and provides examples of simplified, standard and enhanced CDD measures.

Mr. Sydney Asubo, the executive director of FIA explained that the inspection is going to be sample-based in four law firm categories of small, medium, large and global. He further revealed that 10 law firms will be sampled in each category. “We have previously written to the Uganda Law Society that we want to carry out inspections to assess the compliance levels since they have been very low among lawyers and we have received very few suspicious transaction reports from them,” Mr. Asubo said during a validation workshop on guidance notes on combating financial terrorism in Kampala.

 

 

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