By Annet Kobusingye
The High Court of Uganda has directed DFCU Bank to immediately unfreeze a customer’s account containing over Shs80 million, declaring the bank’s prolonged restriction unlawful.
Justice Joyce Kavuma, delivering the judgment on February 23, 2026, in Miscellaneous Application No. 187 of 2025 (Ainebyoona Bob v DFCU Bank [2026] UGHCCD 43) at the Civil Division in Kampala, ruled that the bank’s actions breached statutory obligations under the Anti-Money Laundering Act, violated the banker-customer relationship, and infringed on the constitutional right to property under Article 26 of Uganda’s Constitution.
The case stemmed from events beginning in late 2023. Mr. Bob Ainebyoona, a longtime DFCU customer who described his banking relationship as cordial, attempted to withdraw funds from his Dembe Account at the Naalya branch. He was redirected to other branches and eventually the head office, where the account was restricted.
The restriction followed suspicions linked to transactions involving approximately Shs13.1 million, originally tied to MKASH (likely a mobile money or payment platform) and deposits from bitcoin sales by a co-accused. Ainebyoona was arrested and charged in Criminal Case No. 06655 of 2020 at the Chief Magistrate’s Court, Buganda Road. In December 2023, he was fully acquitted, with the court ruling there was no criminal liability on his part and confirming the funds were legitimate proceeds from bitcoin sales.
Despite the acquittal, DFCU maintained the freeze on Account No. 01071157642434, which held Shs80,450,748. The bank defended its position through an affidavit from its Acting Head of Financial Crime Management, arguing that a criminal acquittal did not eliminate its regulatory duties to prevent potential dissipation of suspicious funds, based on internal investigations revealing potentially fraudulent activity.
Justice Kavuma found critical flaws in this stance. The court noted that while banks may initially freeze suspicious accounts, Ugandan law requires mandatory reporting of suspicions to the Financial Intelligence Authority within strict timelines 48 hours or two working days. No evidence showed DFCU ever filed such a report.
“It is inconceivable,” the judge observed, “for the respondent to keep holding the applicant’s money on grounds of a continuing obligation to report when in fact they have not reported to the relevant authority.”
The ruling emphasized that fraud allegations must be strictly proven, and banks cannot rely indefinitely on unproven suspicions or operate as “parallel tribunals” that bypass constitutional safeguards. While the initial freeze may have been prudent, the over two-year duration exceeded legal limits.
The court declined to award general damages to Ainebyoona due to insufficient specific proof of quantified loss but granted him the costs of the application, meaning DFCU must cover his legal expenses.
DFCU Bank has been ordered to unfreeze the account within seven days of the ruling, unless it files an appeal.
Legal experts view the decision as a strong signal to financial institutions: anti-money laundering powers must be exercised within due process, strict timelines, and evidentiary standards. It reinforces customer protections and highlights the limits of banks’ discretion in account restrictions post-acquittal.