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Money laundering: Blow as Uganda remains greylisted
In a 2015 report, the High-Level Panel on Illicit Financial Flows from Africa projected that the continent loses more than $50b (about Shs183 trillion) a year in criminal financial flows. Photo / File
What you need to know:
- Among other things, this might hinder Uganda’s ability to secure loans and finance from international financial institutions.
Uganda will remain on the “grey list” of nations that do not take full measures to combat money laundering and “terrorism” financing, with threats that the country could be blacklisted “if there is insufficient progress.”
The Financial Action Task Force (FATF), which has repeatedly pushed Uganda’s compliance deadline, has granted a four-month extension to the country to clean up its house, shifting the deadline from June to October. The government asserts that it has met all but two requirements.
“The FATF expresses concern that Uganda failed to complete its action plan, which fully expired in May 2022.
The FATF strongly urges Uganda to swiftly demonstrate significant progress in completing its action plan by October 2023 or the FATF will consider next steps if there is insufficient progress,” FATF’s latest statement says.
The next steps could imply that Uganda could be placed on the FATF’s blacklist, which continues to feature Myanmar (Burma), Iran, and North Korea.
Being included on the FATF Blacklist, often referred to as the “High-Risk and Non-Cooperative Jurisdictions” list, can have detrimental effects on a nation’s financial system, economy, and reputation abroad, including more regulatory scrutiny, less foreign investment, harm to the nation’s reputation, and increased financial isolation.
FATF has urged Uganda to continue to work to implement its action plan to address its strategic deficiencies, including ensuring that competent authorities have timely access to accurate basic and beneficial ownership information for legal entities and increasing awareness on proliferation financing (PF) related Targeted Financial Sanctions (TFS) by conducting training for financial institutions and Designated Non-Financial Business and Professions on the targeted financial sanctions.
Mr Sydney Asubo, the executive director of the Financial Intelligence Authority (FIA)—a government body which is, among others, charged with enhancing and identifying proceeds of crime and combating of money laundering and terrorism financing—in response to our request for a comment, said government will clear the pending issues by the October deadline.
“We are left with only two items out of the original 22 action items that Uganda agreed with FATF to implement. We are confident that by the new deadline of October, we will have addressed these two outstanding items, which are both partly addressed,” Mr Asubo said.
He added: “We have done a lot of work between February 2023 when the previous statement was issued and the latest one issued in June 2023. Within those four months we cleared five issues and remained with only two. And even these two are partly addressed. It is on account of this good progress that Uganda was given an extension to October 2023. Expect good news then.”
In February, Uganda had seven pending items when the FATF established the June deadline. In the past, Uganda narrowly avoided being added to the FATF’s blacklist.
The grey list means
Remaining on the Financial Action Task Force (FATF)’s “grey list” has implications for banks and other financial institutions dealing with clients, transactions, or companies linked to Uganda. Consequently, global financial institutions are now subjecting Uganda to increased scrutiny.
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This might hinder Uganda’s ability to secure loans and finance from international financial institutions. Such institutions may perceive it as a higher risk, potentially discouraging foreign investment. Additionally, there is reputational damage that could deter foreign investment in the country.
