Shs13b exchanged illegally daily 

Plans are underway to bring together all forex and money remittance dealers and forge a way to control illegal money remittance activities in the country. PHOTO | FILE

What you need to know:

  • To date, more than 300 forex bureaus and money remittance businesses are registered by the Bank of Uganda.

More than Shs13b is exchanged outside licenced forex bureaus and money remittance agencies everyday, according to the Bank of Uganda (BOU).

The revelation was made during a meeting between the Central Bank and the registered money remittance firm operators in Kampala to deliberate on ways of stopping illegal operators.

The meeting was held after BOU received reports about unlicensed foreign exchange business and money remittance activities throughout the country.

“Due to numerous reports that were coming through, BOU has decided to take steps in order to address this challenge. One of the first steps taken was to go on a fact finding mission after getting on board a joint task force committee that was composed of various stakeholders,” Mr Nelson Kataza, the Principal Banking Officer - BOU  said.

The committee comprised officers from the regulator BOU, KCCA, the Internal Security Organisation, officials from the Financial Intelligence Authority and Uganda Forex Bureau and Money Remittance Association.

According to Mr Kataza, the report revealed that between Shs13.5b and Shs16b on daily basis was involved in unlicensed foreign exchange trade.

Challenges 

He said one of the challenges that is involved in this kind of trade, is the threat of terrorism financing since huge sums are not in the formal space but being traded on a daily basis. This also poses a big threat of money laundering. 

Other than that, Mr Kataza said they engaged the people on the ground that are involved in that illegal trade at border points in Malaba, Katuna and Busia and found out that there was misinformation about licensing forex bureaus as the people at the border points do not even know that the activity was illegal.

This engagement process is a precursor to enforcement actions that will be undertaken once all those involved in the illegal exercise are sensitised.

According to Mr Ford Francis, the Board Secretary Uganda Forex Bureaus Association the financial sector is widening with so many areas that need to be considered in the law.

“The purpose of the dialogue is to help to bring together all forex and money remittance dealers and forge a way to control illegal money remittance activities and come up with more formal ways of doing business.

To date, more than 300 forex bureaus and money remittance businesses are registered by the Bank of Uganda.

Major destinations        

Foreign Exchange Act Section 5 says except as permitted by any other law no person shall engage in the business of dealing in foreign exchange issued under this Act.

While Regulation 14 states that transacting money remittance business without a license is prohibited.

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