EU removes Uganda from money laundering blacklist
A cash transaction. Being blacklisted has affected Uganda’s foreign direct investment and caused delays in transferring of funds to and from the country. PHOTO/FILE
What you need to know:
- The move comes after Uganda was delisted from the grey list by the Financial Action Task Force on February 23.
The European Union (EU) has boosted Uganda’s financial integrity by deleting the country from its Anti-Money Laundering (AML) Blacklist.
The move, which was done on March 15, came after Uganda was delisted from the grey list by the Financial Action Task Force (FATF) on February 23, in Paris, France.
The EU’s decision to delete Uganda from its AML blacklist was set in its regulation published on Thursday that is binding and applicable in its member states.
FATF leads global action to tackle money laundering, terrorist and proliferation financing. The 39-member body sets international standards to ensure national authorities can effectively go after illicit funds linked to drug trafficking, illicit arms trade, cyber fraud, and other serious crimes.
FATF researches how money is laundered and terrorism is funded, promotes global standards to mitigate the risks, and assesses whether countries are taking effective action.
Commitment
In total, more than 200 countries and jurisdictions have committed to implementing the FATF standards as part of a coordinated global response to prevent organised crime, corruption and terrorism. Countries and jurisdictions are assessed with the help of nine FATF associate member organisations and other global partners, the IMF and World Bank.
The EU said in its publication that Commission Delegated Regulation (EU) 2016/1675 identifies high-risk third countries with strategic deficiencies.
Considering the high level of integration of the international financial system, the close connection of market operators, the high volume of cross-border transactions to and from the Union, as well as the degree of market openness, any Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) threat posed to the international financial system is also a threat to the financial system of the Union.
The EU said it reviewed the progress of Barbados, Gibraltar, Panama, Uganda, and the United Arab Emirates in addressing their strategic deficiencies. Those jurisdictions are identified as high-risk third-country jurisdictions in Delegated Regulation (EU) 2016/1675 but were deleted from the FATF list of ‘Jurisdictions under Increased Monitoring’ in October 2023 (Panama) and February 2024 (Barbados, Gibraltar, Uganda and the United Arab Emirates).
The EU explained that the FATF welcomed the significant progress made by Barbados, Gibraltar, Panama, Uganda, and the United Arab Emirates in improving their AML/CFT regimes and noted that those jurisdictions have established legal and regulatory frameworks to meet the commitments in their respective action plans on the strategic deficiencies identified by the FATF.
“Barbados, Gibraltar, Panama, Uganda and the United Arab Emirates are, therefore, no longer subject to the FATF’s monitoring process under its ongoing global AML/CFT compliance process and will continue to work with their FSRBs (FSRBs ) to further strengthen their AML/CFT regimes,” the EU said.
What Uganda did
It stated that Barbados, Gibraltar, Panama, Uganda, and the United Arab Emirates have strengthened the effectiveness of their AML/CFT regimes and addressed technical deficiencies to meet the commitments in their action plans on the strategic deficiencies identified by the FATF.
“The Commission’s assessment of the available information leads it to conclude that Barbados, Gibraltar, Panama, Uganda and the United Arab Emirates no longer have strategic deficiencies in their AML/CFT regimes,” it said.
Commenting about the European Commission decision, the former executive director of the Financial Intelligence Authority, Mr Sydney Asubo, said: “This is yet another great milestone for Uganda to celebrate in quick succession following on from the FATF delisting. As you are aware, the European Union also keeps its own AML blacklist, mirroring that of the FATF. Except that the EU action usually takes months and months to follow on from the FATF one. This time they have moved swiftly, as they should be.”
The Deputy Governor Bank of Uganda, Dr Michael Atingi-Ego, in an opinion published in the New Vision, said the benefits of removal of Uganda from the grey list include: enhancing reputation, attracting more investors, lowering risk premiums, increased capital inflows due to easier transactions and reduced costs.
In Paris, France, on February 23, the fifth plenary of the FATF under the presidency of T. Raja Kumar, delegates from the FATF’s global network of over 200 jurisdictions and observers participated in three days of discussions on key money laundering, terrorism financing and proliferation financing issues at the FATF headquarters in Paris.
In the statement issued after the plenary, members said they agreed on a new risk-based guidance for the implementation of Recommendation 25 on the beneficial ownership and transparency of legal arrangements.
The delegates said this completes the FATF’s body of work to enhance transparency of beneficial ownership globally and prevent criminals and terrorists from hiding their activities and funds behind complex corporate structures and legal arrangements such as trusts.
Action points
In Paris, France, on February 23, the fifth plenary of the FATF under the presidency of T. Raja Kumar, delegates also agreed to release for public consultation, a range of options for potential changes to Recommendation 16 and its interpretive note on wire transfers. The proposed revisions seek to adapt FATF standards to the changes in payment systems’ business models and messaging standards and ensure that they remain technology-neutral.
“In preparation for the next round of mutual evaluations, the plenary finalised modifications to its assessment methodology to reflect the recent revisions to the FATF standards to protect non-profit organisations from potential abuse for terrorist financing,” the statement states.
