What Uganda’s retention on grey list means

Yona Wanjala 

What you need to know:

More is required by the global watchdog to safeguard Uganda’s financial systems from money laundering and terror financing

The global watchdog against money laundering and financing of terrorism, the Financial Action Task Force (FATF), has retained Uganda on the list of jurisdictions under increased monitoring, also known as the ‘grey list’.

To prevent money laundering, terrorism financing, and proliferation and the harm they cause to society, FATF sets robust standards, invest in resources, and works in collaboration with its members to drive the set plan.

As a practice, FATF identifies jurisdictions with weak measures to combat money laundering and terrorist financing (AML/CFT).

Retaining Uganda on the grey list followed FATF`s review of countries’ progress since March this year.  The other countries on the list include Albania, Barbados, Burkina Faso, Cambodia, Cayman Islands, Haiti, Jamaica, Jordan, Mali, Malta, Morocco, Myanmar, Nicaragua, Pakistan, Panama, Philippines, Senegal, South Sudan, and Turkey.

Uganda’s inclusion on this list may present significant political, economic, and social challenges whose solutions require the collective political power and will of responsible agencies and citizenry.

Being retained on the FATF grey list may not necessarily mean a drastic step as one may imagine, but it would be equally naïve to underestimate the likely corrosive impact attendant to retaining a struggling economy that yearns to raise capital, increase inflows and create jobs.

It is worth noting that the FATF public statement on jurisdictions with strategic deficiencies has come at a time when the country is nursing the effects of the Covid-19 disruptions. The pandemic saw the country plunge into “policy panic and perversion”, sanctioned impunity and muted civil society.

However, this is not the first time Uganda has found itself on one of the FATF’s grey lists. The country was first put on the list in 2014-2017, and then in 2020 spilling over to this retaining in 2022.

In the 2020 follow-up of the mutual evaluation, relating to implementing anti-money laundering and counter-terrorist financing standards, the country was deemed Compliant for 14 and Largely Compliant for 5 of the FATF 40 Recommendations.

Uganda committed to work with the FATF and East and Southern Africa Anti-Money Laundering Group to strengthen the effectiveness of the country’s AML/CFT regime.

Uganda’s political commitment constituted its action plan to address the countries strategic deficiencies in the eight areas, including seeking international cooperation in line with the country’s risk profile; developing and implementing risk-based supervision of financial institutions; ensure competent authorities have timely access to accurate essential and beneficial ownership information for legal entities; establish and implement policies and procedures for identifying, tracing, seizing and confiscating proceeds and instrumentalities of crime; and addressing technical deficiencies in the legal framework to implement PF-related targeted financial sanctions; among others.

It is not enough to pass laws and regulatory measures; more is required by the global watchdog to safeguard Uganda’s financial systems from money laundering and terror financing.

As the government plans to provide and implement her plan of action in the subsequent months, three things may be of great value if considered.

First, the political leadership should demonstrate a deliberate and intentional will to support and strengthen frontline and responsible agencies by providing all the required tools, skills, and independence to intercept and obstruct money laundering.

Second, Uganda needs to be given a chance by both internal and external actors, to heal and rekindle its economy with no adversity triggered by being on the list.

Third, the country has benefited from the tremendous sacrifices in the fight against these crimes. However, more needs to be done to eliminate the militancy and weaponisation of the AML/CFT regime. Adoption of a risk-based approach as advanced by FATF Recommendation 1 would save the country from the unintended consequences attendant to the misapplication of the FATF standards.

Mr Yona Wanjala is a member of global NPO coalition on FATF.

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