Uganda strengthens anti-money laundering law to avoid blacklist

Mr Sydney Asubo, the executive director Finance Intelligence Authority

What you need to know:

Reason. The country is on the list of those with ‘strategic deficiencies’


Uganda is racing against time to avoid the possibility of being blacklisted by the Financial Action Task Force on money laundering (FATF), something that would have overriding implications on the economy.

On Wednesday, Members of Parliament (MPs) passed amendments to the Anti-Money Laundering Act that require disclosures to be made when transactions of Shs100m and above are being made.
More importantly, the amendments also strengthen how Uganda can counter terrorism financing. The amendments were in line with proposals made by FATF.

The list
FATF maintained Uganda on the list of countries with “strategic deficiencies” together with Afghanistan, Ethiopia, Iraq, Syria, Vanuatu, Yemen, Bosnia & Herzegovina and Lao People’s Democratic Republic.

According to the February 24 statement issued by FAFT, “situations differ among each jurisdiction” and they were being treated on a country by country basis.

Uganda was maintained on that list after it adopted proposals on amending laws by the time of the FAFT meeting in January 2017.
Uganda, for instance, has at least six areas that FAFT has raised the red flag. On top of that list is that Uganda needed to deal with deficiencies like “adequately criminalise terrorist financing” and “implement adequate procedures for freezing terrorist assets in accordance with UNSCRs (UN Security Council Resolutions) 1267 and 1373 and their successor resolutions.”

Additionally, FATF wanted the government of Uganda to ensure banks and other financial institutions put in place proper book keeping requirements and amend the Anti-Money Laundering Act.
Uganda had missed two deadlines on document submissions to FATF in December 2016 and January 2017.
Last week, MPs passed a new Insurance law that was also compliant to FAFT guidelines.

Next on the agenda is to amend the Anti-Terrorism Act 2016. Last week, parliament put out a notice for Ugandans to present their views on the amendments to the bill.

In a recent interview with the Daily Monitor, Mr Sydney Asubo, the executive director Finance Intelligence Authority (FIA), had said Uganda would not be blacklisted by June 2017.
“Uganda would not be blacklisted by June 2017 unless we have not done what we are required to do,” he said. That is the time for the next assessment for the country.

“For us to exit in June 2017, we need do certain things. In May 2017, an assessment will be conducted in the country to see if we are making progress on the proposals made to FAFT in January. The findings will be presented to the FATF plenary in June 2017 and then we shall be able to exit,” he added.

Uganda risked being blacklisted if the laws had not been amended, making it hard for international transactions to be made. This would have restricted trade and in part crippled international trade.
The working assumption is that by the time of the next review in May 2017, all the laws would be fully operational and Uganda would be taken off the list of non-compliant countries.

The crime

Money laundering is turning illegally obtained property/money into seemingly legitimate or lawful property/money and it includes concealing the nature, source, location, movement of the proceeds of crime.
The Finance Intelligence Authority was established in 2013 under the Anti-Money Laundering Act to combat money laundering activities in the country.