Bank of Uganda headquarters in Kampala.
KAMPALA, UGANDA – The Bank of Uganda has issued a warning to Payment Service Providers (PSPs) against dealing with unlicensed digital lenders, citing concerns over predatory lending practices and unethical collection methods.
“In order to protect consumers and maintain the stability of the financial system, it is crucial that Payment Service Providers and Payment System Operators conduct thorough due diligence on digital lenders before engaging in business relationships,” said Mackay Aomu, Director at the Bank of Uganda. “We will not hesitate to take administrative measures against any institution that fails to comply with this directive.”
In a circular issued to PSPs and Payment System Operators (PSOs), the central bank reminded them of their obligations under the National Payment Systems Act, 2020, and the Anti-Money Laundering Act, 2013 (as amended). The bank noted that some PSPs and PSOs have been partnering with unlicensed digital lenders, exposing consumers to risks.
“The Bank of Uganda is committed to ensuring that all financial institutions operate in a safe and sound manner, and that the financial system is protected from illicit activities,” said Aomu. “We urge consumers to exercise caution when dealing with digital lenders and to report any suspicious activities to the authorities.”
The warning is effective immediately, and PSPs and PSOs must comply promptly. Consumers are urged to exercise caution when dealing with digital lenders and report suspicious activities to the authorities.
