The proliferation of unlicensed digital lending apps, also known as spy loan apps, has raised serious concerns from the Central Bank of Uganda, as many vulnerable Ugandans have fallen victim to these predatory services. Sensitive data from these apps is reportedly being sold on the dark web to hackers.
In a letter dated May 29, the Central Bank highlighted the prevalence of unlicensed payment service providers and payment system operators dominating the digital payment landscape. The letter noted widespread complaints about these spy loan apps engaging in unethical collection practices, imposing high interest rates, and harassing borrowers.
Mackay Aomu, Director of National Payment Systems at the Bank of Uganda, emphasized that section 6 of the Anti-Money Laundering Act 2013 (as amended) and regulation 18 of the Anti-Money Laundering Regulations 2015 mandate that accountable persons must undertake customer due diligence measures before establishing any business relationship.
The Central Bank has also directed digital lenders to carry out due diligence by obtaining valid licenses and confirmations from the Uganda Microfinance Regulatory Authority.
Cybersecurity expert Jerome Okot explained how digital money lenders exploit security gaps to access and capture sensitive financial information from vulnerable Ugandans. Okot advised users to avoid downloading malicious apps and stressed the importance of reducing the use of unregulated apps that demand access to financial information.
“Not every money lending app you come across is regulated. Perform due diligence before providing your personal information to ensure you are accessing a legitimate credit service,” Okot said.
