Principle

Money Laundering–Powers of the Financial Intelligence Authority to freeze bank accounts—evidence of illegal activities must be present.

Case summary and outcome

The Applicants brought an application for judicial review to challenge the decision of the Financial Intelligence Authority (FIA) to freeze funds held at their respective accounts on allegations that the funds were intended for terrorism activities. The Court held that Section 17A of the Anti-terrorism (Amendment) Act, 2015 requires that, before freezing of any one’s funds or seizing their the property, FIA must be satisfied that the funds or property in issue is intended for terrorism activities; and in order for such decision to be arrived at, it must consider information or look at circumstances leading to reasonable suspicion that the suspected party has engaged or is about to engage in terrorism activities.

Facts

The Applicants, which are indigenous Non-Governmental Organizations duly registered with the National Bureau for Non-Governmental Organizations, Uganda and receiving funding support from various International Development Partners, whereas FIA is a Government Agency mandated to fight money laundering and combating terrorism financing in Uganda. On or about November 23, 2020, FIA instructed all the Applicants’ bankers to freeze all the accounts belonging to the Applicants. The said orders were issued under Section 17A of the Anti-Terrorism (Amendment) Act, 2015, on allegations that the funds were intended for terrorism activities. The Applicants, being dissatisfied with the decision of the freeze their bank accounts, filed an application for judicial review.

Issue

The major issue for determination was:

1. Whether the Respondents’ actions in regard to the Applicants were lawful, judicious and in accordance with the rules of natural justice.

Holding

Reasoning of the Court

Section 17A of the Anti-Terrorism (Amendment) Act, 2015 requires that, before freezing of any one’s funds or seizing their the property, FIA must be satisfied that the funds or property in issue is intended for terrorism activities; and in order for such decision to be arrived at, it must consider 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 reasoned that FIA did not present any evidence that it claims to have relied on to freeze the Applicants’ Bank Accounts, and yet it relies on intelligence reports that the Applicants were financing terrorist activities.

FIA should have informed the court about the evidence that was the basis of its actions for consideration in camera, if it considered the information too confidential to be presented in open court.

Significance of the Decision

This decision establishes an important precedent which clarifies the law in regard to the powers of the FIA and other government agencies to order for the freezing or restricting of financial transactions or properties of individuals in Uganda in matters relating to terrorism financing.