Circular to all Payment Service Providers and Payment System Operators
Customer Due Diligence for Digital Lenders
Bank of Uganda has noted with concern that some of the Payment Service Providers (PSPs) and Payment System Operators (PSOs) continue to enter business relationships with unlicensed digital lenders. Such institutions have been reported to engage in predatory lending behavior, unethical collection practices, and harassment of borrowers.
You are therefore reminded of the provisions of Section 54(h) of the National Payment Systems Act, 2020 which states that credit products can only be offered in partnership with licensed lenders, with the approval of the central bank.
You are further reminded that Section 6 of the Anti-Money Laundering Act, 2013 (as amended) and Regulation 18 of the Anti-Money Laundering Regulations, 2015 (as amended) require an accountable person to undertake customer due diligence measures before establishing any business relationship and thereafter perform due diligence on an ongoing basis.
Pursuant to Regulation 53(2)(d) of the Anti-Money Laundering Regulations, 2015 (as amended), you are hereby directed to conduct due diligence on all digital lenders before engaging in business relationships, to ensure that they hold valid licenses and to obtain confirmations from UMRA.
Bank of Uganda will institute the necessary administrative measures against any institution that fails to abide by the above directive.