The Civil Division of the High Court has directed DFCU Bank to restore access to a customer’s account that had remained blocked since 2023 over suspected money laundering.
In a detailed judgment, Justice Joyce Kavuma faulted DFCU Bank for maintaining restrictions on the account of Bob Ainebyoona despite his acquittal on the very allegations that triggered the freeze.
The court acknowledged that financial institutions are permitted to suspend accounts where suspicious transactions arise. However, Justice Kavuma emphasized that such measures must be grounded in law, supported by clear justification, and implemented with procedural fairness, including giving the affected customer an opportunity to be heard.
She stressed that courts have a duty to intervene where unlawful banking actions threaten individual rights or public confidence in the financial system.
At the same time, she underscored the importance of ensuring that banks operate within proper regulatory supervision, including oversight by the Central Bank and the Financial Intelligence Authority, so that suspicious transactions are handled appropriately without unfairly harming innocent account holders.
According to court records, Ainebyoona held a Dembe Account with DFCU and had maintained what he described as a cordial banking relationship until he attempted to withdraw funds at the bank’s Naalya branch.
He was redirected to the Ndeeba branch and later to the head office in Kampala. There, he said, he was detained and subsequently arrested by police on allegations of theft. His account was frozen without prior notice.
He was later charged with stealing UGX 13.1 million from MKASH. In December 2023, a Chief Magistrate acquitted him of the charges. Despite the acquittal, the bank declined to lift the freeze.
In its defence, DFCU argued that its internal investigations indicated the funds had been fraudulently obtained, contrary to financial laws and its Anti-Money Laundering and compliance policies. The bank also maintained that the magistrate’s decision did not conclusively determine the ownership of the disputed funds.
Justice Kavuma, however, reaffirmed that the banker–customer relationship is contractual in nature and imposes obligations on the bank to exercise reasonable care and skill.
A bank’s core responsibilities include receiving customer deposits and honouring legitimate withdrawal instructions. Any decision to restrict access to an account, she ruled, must therefore be backed by lawful and sufficient grounds, proper notice, and not be based on arbitrary considerations.
The judge further observed that it was untenable for the bank to justify continued retention of the funds on the basis of reporting obligations to the Financial Intelligence Authority when no such report had been made. She noted that the funds had been held beyond the statutory period prescribed for handling suspicious transactions.
Importantly, the court found that the bank’s suspicions were anchored in the same transactions that had already been scrutinized during the criminal trial, and that no fresh evidence of additional fraudulent activity had been presented beyond the acquitted sum of UGX 13,100,000.
Allowing the restriction to persist under those circumstances, the judge held, would infringe on the applicant’s constitutional right to property.
The court consequently ordered DFCU Bank to unfreeze Ainebyoona’s account within seven days of the ruling and awarded him the costs of the suit.
English 