Battling the underworld of bulk cash smuggling in Uganda

Authorities at the Uganda-Kenya border have their work cut out as they attempt to combat currency smuggling offences in Malaba. 

This illicit practice involves the illegal transportation of large sums of money across international borders, often undermining the economies of both nations. 

As law enforcement agencies strengthen their efforts, an unfolding hidden war reveals the complexity and dangers involved in curbing this illicit activity.

The Uganda-Kenya border straddles nearly 800 kilometres, presenting a vast expanse that is difficult to monitor effectively. Smugglers exploit this vastness, taking advantage of porous border areas, informal crossing points, and remote regions to carry out their activities.

Mr Julius Caesar Tusingwire, the regional police commander (RPC) for Bukedi South, says the vice is perpetuated by smugglers that dare to use boda boda riders to carry cash across unmanned border routes.

“We have not been able to make arrests because most of the time [the smugglers] use illegal routes, but we are proposing to strengthen surveillance,” Mr  Tusingwire told Monitor. 

Currency smugglers employ various methods to transport illegal funds. These range from concealing money within everyday objects to using human couriers and vehicles modified with hidden compartments.

The boda boda riders at Busia border, who spoke to Monitor, said the currency notes are usually hidden in inconspicuous packages.

“Though it’s a risky job, it pays well and I think it’s more profitable to break the law than toe the line,” a motorcyclist, who spoke on condition of anonymity, told Monitor.

A report by the Paris-based global money laundering watchdog, the Financial Action Task Force (FAFT), says cash-based economies such as Uganda are particularly vulnerable to currency smuggling. 

The report titled ‘Money laundering through the physical transportation of cash,’ says the principal attraction and benefit for criminals is that illegally-obtained cash can be smuggled in the form of ‘hard currency’ and can be moved without an audit or banking trail.

Grave implications
The consequences of currency smuggling are far-reaching, with the potential to destabilise a country’s financial system. Moreover, this illicit trade often serves as a conduit for other criminal activities, including drug trafficking and terrorism financing.

The Anti Money Laundering Act 2013 seeks to curtail this. It provides strict regulation for the cross-border movement of currency and other financial instruments.

According to the law, persons entering the country with money exceeding 1,500 currency points (Shs30 million) must notify the Uganda Revenue Authority (URA).

Failure to report to the taxman can attract a maximum penalty of 15 years in prison, a fine exceeding about Shs2 billion or both.

The covert nature of currency smuggling, however, makes curbing the crime a challenge. Detecting concealed currency requires advanced scanning equipment, trained personnel, and effective intelligence networks.

Unfortunately, resource constraints and limited funding often hamper the efforts of law enforcement agencies, leaving them at a disadvantage. 

Swinging into action
In March, URA officials at the Busia border post arrested three people on allegations of smuggling into the country counterfeit currency amounting to Shs40.8 million.

In February, three Somali nationals were apprehended at the Oraba border post, attempting to cross into Uganda from South Sudan without declaring more than Shs122 million.

A month earlier, URA officials intercepted a Congolese national in Bwera, Kasese District, smuggling fake dollar bills amounting to $500,000.

Mr Adam Kimuli, the district police commander in Tororo, told Sunday Monitor that one person was arrested by officers on patrol nearly a month ago. The suspect was found with fake dollars that had been smuggled into the country.     

“Most of the time we rarely have enough intelligence to arrest such culprits because of lack of enough manpower to carry out patrols,” he said.

The Bukedi South regional police spokesperson, Mr Moses Mugwe, says cash smuggling has increased and that its destination is in Kenya.

“Most of the cases are intercepted on the Kenya side and the money is from Uganda. The money is transported by the boda boda riders through the porous routes to Kenya unnoticed,” he says.

Herculean task
Mr Mugwe adds that curbing the crime is not easy because it requires sniffer dogs to be deployed at every border point.

These money smugglers are called ‘illegal cash couriers.’ The Eastern and Southern African Anti-Money Laundering Group (ESAAMLG) describes them as individuals, who illegally physically transport, mail, ship or cause currency to be physically transported or shipped.

ESAAMLG says ‘dirty’ money transmitted by the couriers may be laundered through retail, entertainment or gambling. It can also be introduced into the financial system through banks. 

Uganda, like many countries, is battling to comprehensively regulate all cash smuggling entry points. This means that most cases of currency smuggling go undetected. 

Mr Emmanuel Badede, the officer in charge of Lwakhakha border post in Manafwa District, says surveillance to monitor smuggling is ongoing in spite of the challenges.

“We are able to intercept [the smugglers] most of the time with goods such as food, wheat, cooking oil and engine oil,” he says, adding, “They pay fines and take away their goods.” 

The assistant commissioner of trade at URA, Mr Geoffrey Okaka, tells Monitor that officers conduct routine checks of interstate buses and vehicles entering the country in order to curb the crime. 

He further notes that these measures are taken in addition to “information sharing and coordination with government agencies at the border points like security, and recruitment of credible and reliable informants.”

Mr Okaka also reveals that other strategies include prosecution of the culprits and offenders connected to or found in possession of the smuggled currency.

“We also use drive-through scanners, unit scanners and hand baggage,” he adds.

Money laundering 
Aside from the capacity of URA to detect currency smuggling, reports of far-reaching corruption that aids the crime is a concern.

A customs official, who spoke to Monitor on condition of anonymity, claims that a small number of corrupt officials, enticed by the prospect of quick wealth, aid smugglers by turning a blind eye or providing insider information.

“We have very few cases of cash smuggling that are recorded because the deployed customs officials and police take bribes from smugglers to ensure that the money reaches its destination to either side of the border,” the source says.

Mr Asa Kalami Orimodi, the former chairperson of Malaba Town Council, claims that URA officers manning checkpoints are to blame because they receive bribes from smugglers. 

“I always travel on Malaba-Tororo road, but whenever we reach the URA checkpoint, I see the officers manning those check points receive bribes from smugglers. In this case, who is to be blamed? The government needs to check on its systems,”  Mr Orimodi says.

Mr Andrew Mugisha Orono, the chairperson of Malaba Town Council, echoes this claim.

“The worst part of it is that the culprits use all forms of tricks, including bribery to see to it that their money or goods cross to either Kenya or Uganda,”  Mr Orono says. 

Compounding this problem, is a lack of updated information on money laundering through means such as currency smuggling.

Mixed fortunes
A directive issued on the Bank of Uganda website by the Executive Director for Administration, Mr John Chemonges, states that there are no statistics available in Uganda on money laundering activities, which makes it difficult to gauge the extent of the problem.

“The people who launder money through business compete unfairly with legitimate businesses. This is because they will go to any length to make sure their business survives hence strategies like cutting prices below the market levels is common. This can eventually put honest business out of business,” the directive reads.

These challenges aside, Uganda has made some progress in combatting cash smuggling. Governments in the region are strengthening their legislation, improving border infrastructure, and investing in training and technology to enhance detection capabilities. 

International cooperation and support from organisations such as the United Nations Office on Drugs and Crime (UNODC) and Interpol are instrumental in bolstering these efforts.

Meanwhile, residents of border towns like Malaba and Busia hope that quick solutions will be found. Mr Peter Ajeko, the chairperson of Malaba Traders Association, says, “government loses money because those involved evade taxes, so they must work to address it.”

Risks
Mr Sam Wambaka, a former banker and financial expert, who works with Godwill Financial Services Ltd, says currency smuggling is often used as a vehicle for money laundering.

“This money most of the time ends up into the legitimate stream of commerce such as construction of rentals and other legitimate businesses,” he reveals. 

Mr Wambaka says the government should strengthen its presence at the border points to arrest the culprits so as to ascertain the source and the end destination of such illicit finance.

This story was written as part of Wealth of Nations, a media skills capacity building programme implemented in partnership with the African Centre for Media Excellence.