UGANDA: COURT FINDS ACTIONS OF FREEZING BANK ACCOUNTS BY THE FINANCIAL INTELLIGENCE AUTHORITY ILLEGAL

By Apolo Katumba,Jonathan Kiwana,David F.K. Mpanga Tuesday, September 20, 2022
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The High Court of Uganda (Court) has found the actions of the Financial Intelligence Authority (FIA) in freezing the accounts of Uganda Women’s Network and the Uganda National NGO Forum on the grounds of financing terrorist activities to be illegal, ultra vires and irregular. 

In November 2020 the FIA claimed it received intelligence reports from unnamed national security agencies that the civil society organisations (CSOs) were involved in unspecified terrorism financing activities. The FIA claimed that it diligently and cautiously analysed the said intelligence and, having done so, satisfied itself that the CSOs’ funds were intended for terrorism activities. Accordingly, the FIA exercised its discretion to freeze their accounts at various commercial banks operating in Uganda under Section 21 (o) of the Anti-Money Laundering Act, 2013.  

On 9 December 2020, the FIA wrote letters to the banks revoking its previous instructions of November and instructing them to freeze the CSOs’ bank accounts, pursuant to Section 17A (1) of the Anti-Terrorism (Amendment) Act 2015 instead. The CSOs’ bank accounts were accordingly unfrozen and immediately refrozen. 

The FIA also notified the Office of the Director of Public Prosecutions (ODPP) of its decision under Section 17 A (2) of the Anti-Terrorism (Amendment) Act, 2015. The ODPP in turn directed the Criminal Investigations Department of the Uganda Police Force to open prosecution-led investigations into the matter. Having not heard from either the ODPP or the FIA and, frustrated by the difficult position of having their accounts frozen for about two months, the CSOs applied for judicial review in the Civil Division of the High Court.  

Arguments

In their application, the CSOs argued that the decision to freeze, unfreeze and again freeze their accounts was an unreasonable exercise of discretionary power, illegal and procedurally improper. The Court agreed and held that, under the law, before freezing anyone’s funds or seizing their property, the FIA must be satisfied that the funds or property in issue are intended for terrorism activities. 

The Court further observed that for the FIA to be satisfied as provided under Section 17 A of the Anti-Terrorism (Amendment) Act, 2015, it must have information or look at circumstances leading to reasonable suspicion that the suspected party has engaged, or is about to engage, in terrorism activities. 

The Court opined that there must be a proper basis for the FIA’s actions, and it must be in a position to present that information or circumstances to Court if called upon, for the Court to see that there was genuine cause for its actions. In response to the argument that intelligence reviewed by the FIA could have been confidential, the Court observed that the law makes provision for the FIA to present such information discreetly if the same is necessitated. 

Rationale

In rendering its decision, the Court held that the FIA had not presented any evidence that it claimed to have relied on to freeze the CSOs' bank accounts and yet it had claimed to have received intelligence reports that the CSOs were financing terrorist activities. The Court also observed that when the matter was referred to the ODPP, the FIA was directed by the ODPP to unfreeze the CSOs accounts pending further investigations into the matter. In the Court’s opinion, it appeared that the ODPP too had found no credible evidence warranting the freezing of the CSOs' accounts. 

Conclusion

The Court accordingly found the actions of the FIA to be illegal, ultra vires and irregular, and ordered the FIA to pay the costs of the application. The FIA has indicated its dissatisfaction with the ruling and its intention to appeal the same. In the interim, however, the implicated CSOs and the wider business community can find comfort in this decision because it provides an indication that they can find relief from actions of the Executive/ Regulators.