Attorney General clarifies on treatment of former MPs and ministers as PEP
“Uganda does not have a cut-off date for when one ceases to be a politically exposed person,” said Kafuuzi.
Deputy Attorney General Jackson Kafuuzi said Uganda’s Anti-Money Laundering Act does not prescribe a fixed period after which a former PEP automatically stops being treated as politically exposed.. (File photo)
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Uganda's Attorney General office has clarified that former Members of Parliament and ministers do not automatically cease to be treated as politically exposed persons (PEPs) after leaving public office, saying banks must assess each former officeholder on a case-by-case basis.
The clarification has triggered fresh debate in Parliament, with former legislators complaining that their PEP status continues to subject them to enhanced scrutiny by banks and other institutions, even years after leaving public office.
In a statement presented to Parliament on October 7, Deputy Attorney General Jackson Kafuuzi said Uganda’s Anti-Money Laundering Act does not prescribe a fixed period after which a former PEP automatically stops being treated as politically exposed.
“Uganda does not have a cut-off date for when one ceases to be a politically exposed person,” he said.
He explained that financial institutions are instead required to apply a risk-based approach, taking into account factors such as the seniority of the former officeholder’s position, how recently the person left office and whether the individual continues to exercise influence or control assets.
The statement followed concerns raised by Deputy Speaker Thomas Tayebwa, who told Parliament that former ministers and MPs had approached him complaining about difficulties they face when accessing banking and other financial services because of their PEP status.
Tayebwa sought clarification on when a former public official should cease to be subjected to enhanced scrutiny, particularly those who left Parliament or government many years ago.
The Attorney General said the law deliberately avoids imposing a uniform expiry period because the risks associated with former public officials vary from one individual to another.
Kafuuzi informed Parliament that under Section 1 of the Anti-Money Laundering Act, a politically exposed person is an individual who is or has been entrusted with a prominent public function.
The category includes heads of state or government, senior politicians, senior government officials, judicial and military officials, senior executives of State-owned corporations and important political party officials.
It also covers people entrusted with prominent public functions by international organisations and persons related or closely associated with such individuals.
He explained that the requirement does not mean that the person has committed a crime but rather it requires financial institutions to apply additional safeguards because people who hold or have held prominent public positions may present higher risks of corruption, bribery, money laundering or abuse of public office.
Instead, institutions are expected to assess the circumstances and risk profile of each individual.
A former official who recently left a senior position and continues to wield significant influence, for example, could attract greater scrutiny than another former officeholder who left public life many years ago and no longer exercises significant influence.
The same principle applies where a former official continues to control significant assets or maintains relationships that could expose the financial system to heightened risks.
The explanation, however, did not satisfy MP Paul Mwiru, who questioned why former politicians should continue to face restrictions when their sources of income are legitimate and known to Government.
Mwiru said his experience seeking bank financing had felt like discrimination, arguing that he earns from legitimate sources, pays taxes and obtains tax clearance certificates from the Uganda Revenue Authority.
He said his political history should not automatically make institutions suspicious of him.
“When I'm a politically exposed person as it is, it does not mean that I am a thief,” Mwiru said.
He said he had encountered organisations that refused to transact with him simply because he was classified as politically exposed.
Mwiru said one supermarket had allegedly rejected his products because of his PEP status, arguing that the treatment went beyond legitimate financial scrutiny and amounted to discrimination.
He called for amendments to the law to prevent politicians and former politicians from being treated as inherently dishonest.
Mwiru also questioned the continued application of PEP standards, describing some of the requirements as “tools of colonialism” and urging Government to review the framework.
Sarah Kityo, the Bukoto East MP, said the requirements make it difficult for MPs to raise funds outside government to address pressing needs in their constituencies.
She cited efforts by MPs to mobilise support for community projects, including access to clean water, saying political office should not prevent them from attracting legitimate private or donor funding.
“But if again it is really hard for a member of parliament to raise funds outside government to serve the people that you represent, where do we go to? What are we supposed to do?” Kityo asked.
She said MPs were being placed in a difficult position where they could not rely entirely on government resources but also faced barriers when seeking support elsewhere.
“It's like they have locked us in a cage. You can't get enough and you can't run outside,” she said.
Kityo also complained that transactions involving MPs could attract disproportionate scrutiny.
“Every single coin that enters your account is investigated as if you were a terrorist,” she said.
Sylvia Nayebale, the Gomba District Woman Representative, similarly complained about difficulties experienced by politicians when accessing their own money.
“It is very unfortunate that we go to the bank, we take our money willingly, but withdrawing it becomes a problem,” Nayebale said.
She urged the Attorney General’s office to address what she described as barriers preventing politicians from banking and investing normally.
Defence Minister Kiryowa Kiwanuka agreed with Mwiru that it would be wrong for institutions to refuse to deal with an individual merely because that person is politically exposed.
“First of all, it's not correct that because you're politically exposed, therefore people should not deal with you. You're correct to that extent, that's discrimination,” Kiwanuka said.
However, he cautioned that introducing a fixed period in Ugandan law would not necessarily resolve all the difficulties because financial institutions may also be required to comply with foreign rules and international standards.