This year, Uganda narrowly survived being blacklisted by Financial Action Task Force (FATF) for paying a deaf ear to money laundering and proliferation financing.
It came after the FATF declined to adopt Uganda’s money laundering and terror financing risk assessment report done by the Ministry of Finance, the Financial Intelligence Authority (FIA) and some NGOs in 2018.
According to experts that talked to Nile Post when a country is black-listed, countries or other financial jurisdictions block some transactions if they cannot ascertain the source or destination of the money, or prove that it has nothing to do with money laundering.
The FATF is an inter-governmental policymaking body that determines anti-money-laundering and countering the financing of terrorism standards to safeguard the global financial system.
Money laundering is the process of making large amounts of money generated through criminal activity appear to come from a legitimate source.
In most countries including Uganda, the conversion or transfer of proceeds of crime to disguise or conceal its illicit origin is criminalised as the offence of money laundering.
In 2013, Uganda passed the Anti-Money Laundering Act to fight the practice.
In Uganda, money launderers have targeted the real estate business to clean the dirty money and get it into the financial system.
Other avenues used by these launderers include investing in gambling businesses like casinos, buying luxury cars and boats.
Yet all this could change.
Recently, the Financial Intelligence Authority expressed commitment towards leveraging on digital innovations to curb money laundering and terrorism financing among financial sector players which is currently still a very big issue in the country.
This system was launched with the support from the United Nations Office on Drugs and Crime(UNODC).
Much as forex bureaus and gold trade are the highest contributors to illicit financial flows in Uganda, FIA believes that Go Anti Money Laundering System (goAML) which was officially launched on 31 October 2022 will help to fight some of these financial related crimes.
In 2021/2022, Uganda earned $2.2 billion from gold export, much more than the available quantities in the country to warrant those earnings.
Sydney Asubo, the executive director of FIA, said in the 2020/2021, the authority received and analyzed 2,419 suspicious transaction reports.
Of these, 76 intelligence reports were generated and disseminated to various law enforcement agencies for further investigations.
“Section 9 of the Anti-Money Laundering Act mandates the authority to monitor and obtain suspicious transaction reports from accountable persons and this online system will ease our work as the authority,” he stated.
Some of the accountable persons under the law include; non-government organisations, advocates, casinos, trusts, financial institutions, registrars of land, churches, real estate agents and other charitable organisations, among others.
With the manual registration process, Asubo stated it was increasingly getting harder to monitor scattered and unregulated institutions and yet they are highly susceptible to money laundering and illicit finance.
“The law sets out a number of obligations on reporting entities and one of them is that they must register with the authority and on the other hand, we are required to maintain the register of all the accountable persons. There were so many inefficiencies with manual registration processes and this system will help us to know all the reporting entities across the country,” he said.
The online system according to the authority will also help to easily identify and know accountable persons who have or not filed annual reports and also understand those who have compiled periodic independent compliance reports.
Sharon Lesa Nyambe, the head of office at the United Nations Office on Drugs and Crime (UNODC) said the new system will help them to focus on countering illicit financial flows linked to illegal mining, trafficking and dealings in precious minerals among others.
She said the system is an intelligence and analysis software that allows reporting entities both financial and non-financial institutions that have potential to be used for money laundering to submit electronically and securely the suspicious transactions reports to the member states.
“The software then provides an advanced platform to the analysis of the financial intelligence unit to analyze and then exchange information with other law enforcement intelligence databases to build the case using many resources,” explained Nyambe.
According to a report by Global Financial Integrity (GFI) and Advocates Coalition for Development and Environment (ACODE), Uganda annually loses an estimate of Shs 2 trillion ($550m) in illicit financial flows including money laundering.
These grim statistics indicate that money laundering in Uganda continues to thrive un detected and were detected unpunished.
This electronic system is expected to help in fighting money laundering because it will make registration easy which is meant to increase the number of reporting entities which are registered with the authority.
James Ssaka, financial analyst at FIA told the Nile Post that those that are registered have the obligation to meet by filling various reports to the authority which is going to help them to have more data to support the analysis of suspicious transactions.
There are some reporting entities who have not registered with the authority for instance, forex bureaus, non-government organisations, some accountants and trustees and yet they are supposed to register with the authority. It is only supervised institutions that have fully registered with the authority.
The executive director at Center for Constitutional Governance, Sarah Bireete said the whole issue of having a manual registration process could have been one of factors that led to less than a 100% registration of accountable persons.
She said there are many companies that are facing challenges with the manual system.
“We have an NGO bureau and that is where we are supposed to report. Our work is clear; why should we report to the FIA? But because of our internal politics that is why NGOs are on that list. For us we have been compliant and we have been doing this very well,” she noted.
In December 2020, the accounts of some non-governmental organisations were frozen on the orders of the FIA following months of investigations after being accused of allegedly involving in moving money to finance terrorism activities.
Asubo said it is a must for all actors in the financial services industry, as a matter of policy, to register online with the authority or face the law.
Experts said that the implementation of this system provides Uganda with more advance technologies for fighting financial crime including money laundering and terrorist financing.
Collin Baburukamu, from the National Information Technology Authority-Uganda (NITA-U), said anti-money laundering, terrorism financing and cyber security are pertinent discussions that should not be taken lightly and will go beyond additional financial institutions.
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