The prolonged freezing of the account without judicial approval deprived BMS of access to its funds for an “inordinate period,” the court added.
The High Court of Uganda has ruled that the Financial Intelligence Authority (FIA) must act on credible evidence and seek prompt judicial approval when freezing bank accounts, setting new limits on the agency’s powers under anti-money laundering laws.
In a judgment delivered by Justice Isaac Teko in the Civil Division, the court found that while the FIA can order account freezes on suspicion of money laundering, such actions must be grounded in “objective material” and followed swiftly by court oversight to ensure due process.
“The authority must act on demonstrable and sufficiently reasonable evidence and promptly seek judicial sanction,” the court held, emphasizing that affected parties must be given an opportunity to be heard during subsequent proceedings.
The case arose from a judicial review application filed by BMS General Trading, a client represented by MMAKS Advocates, against the FIA and the Attorney General.
Court documents show that BMS received $221,000 in 2024 from a grain sale. More than a year later, in October 2025, the FIA directed the company’s bank to freeze its account, citing suspected money laundering based on a notice from the Office of the Director of Public Prosecutions.
BMS challenged the freeze after failing to obtain a clear explanation from both the bank and the FIA, arguing that the directive was unlawful, irrational and procedurally flawed.
The FIA defended its actions, saying it had reasonable grounds under the Anti-Money Laundering Act.
However, the court ruled in favor of BMS, finding that the authority acted “illegally, irrationally and with procedural impropriety.”
No Evidence, No Charges
Justice Teko noted that the FIA failed to provide evidence linking the funds to criminal activity, despite being presented with invoices and receipts showing a legitimate grain transaction.
“There was no logical nexus between the suspicion and the decision to freeze the account,” the ruling said.
The court also observed that the FIA did not bring any criminal charges against BMS and only sought a court order to justify the freeze after the company initiated legal action.
The prolonged freezing of the account without judicial approval deprived BMS of access to its funds for an “inordinate period,” the court added.
While the court acknowledged that prior notice to account holders could undermine investigations, it stressed that safeguards must follow immediately after a freeze.
“National security and financial system integrity concerns do not override the need for proportionate, transparent action subject to prompt judicial control,” the judgment stated.
The ruling did not define a specific timeframe for obtaining court approval but underscored that it must be done without undue delay.
Implications
Legal analysts say the decision sets an important precedent by reinforcing checks on the FIA’s enforcement powers, particularly in balancing financial crime prevention with constitutional rights.
The judgment affirms that authorities cannot freeze accounts indefinitely without evidence or court supervision, strengthening protections for property rights and fair administrative treatment.
The Financial Intelligence Authority has not publicly commented on the ruling.
