Govt in race to clear money laundering claims

Uganda is racing against time to address 16 issues related to money laundering and terrorism financing to avoid slipping to the Financial Action Taskforce (FAFT) blacklist, which would present crippling effects to the country’s economy.  

The FAFT is a global money laundering and terrorism financing watchdog with an aim of preventing illegal activities.

Speaking to journalists in Kampala yesterday, the executive director of Financial Intelligence Authority (FIA),  Mr Sydney Asubo, said the country was placed in the FAFT money laundering watch list for the second time in 2020.

Of the 22 deficiencies highlighted in Uganda to fight money laundering that caused it to be grey listed, only six had been addressed by January this year.

“When Uganda was assessed in 2016, a number of issues were identified and a review in 2020 [found that] some issues were still not addressed. There were 22 particular action items. These were to be addressed by January but the deadline was pushed by four months due to the Covid-19 pandemic disruptions,” Mr Asubo said.

Countries on the grey list mean they are under increased monitoring, and actively working to address deficiencies in their regimes to counter money laundering and terrorism financing.

Following the greylisting, the Minister of Finance set up a multispectral National Money Laundering Taskforces to fast-track the solutions.

Since then, government has completed a risk assessment of legal persons and arrangements, established a national anti-money laundering and anti-terrorism financing strategy and trained law enforcement agencies, Directorate of Public Prosecutions, and Judiciary in application of the money laundering offence and detecting terrorism financing and related activity.

To be taken off the grey list, Uganda will have to exhibit political commitment and a sustainability plan for the reforms.

“If you don’t address the issues when you are on the grey list, the risk is you move to the blacklist. That is why we are working very hard to ensure we remain on the grey list until we have addressed all the issues,”  Mr Asubo said.

“The consequence of a blacklist would negatively affect the ability of our financial institutions to conduct international financial transactions and international business in general. Commercial banks’ foreign operations would be crippled by the sanctions that would, among other things, prohibit other foreign financial institutions from dealing with our financial institutions, this could affect the receipt of our export earnings,” he added.

Mr Asubo said foreign investments would be adversely affected since investors would shy away from the country blacklisted.

He said the main sources of money laundering include wildlife crime, drug trafficking, human trafficking, and fraud.

He, however, said the number of investigations and convictions do not reflect the intensity of the crime on the ground.

According to Mr Asubo, 10 convictions have been made since money laundering became a crime in Uganda seven years ago.

A case could take an average of three years to be concluded.

The pending issues

The Financial Action Taskforce is expected to conduct an assessment to determine how far Uganda has progressed on addressing the  pending issues, including development of a  comprehensive and standardised policy of confiscation of proceeds of crime through the enactment of the Proceeds of Crime Bill, providing a legal basis for the prevision of accurate basic and beneficial ownership information for legal entities and risk assessment for the NGO sector, among others. The authority has also lined up multiple amendments to laws, including the Companies Act, Trustees Act, Partnerships Act, and the Insolvency Act.

“As at January, we had addressed six of those issues and there were 16 pending and we are optimistic from our engagements in May, there will be more improvements,” Mr Sydney Asubo said. The status on Uganda is expected to be updated  in mid-June