Parliament this week passed the Anti-Money Laundering (Amendment) Bill, 2022, a ratified legislation that seeks to end money laundering out of the country.
This was passed alongside other Bills including the Trustees Incorporation (Amendment) Bill, 2022; the Cooperative Societies (Amendment) Bill, 2022, the Excise Duty (Amendment) Bill, 2022; the Insolvency (Amendment) Bill, 2022 and the Partnership (Amendment) Bill.
Among all Bills, Uganda badly needed the Anti-money laundering Bill because it risked being placed on the Black list from the current grey list where they are.
When the country is on the grey list, it means financial transactions with other countries will be handled with more caution, encountering more scrutiny than those of other countries. This means slowing down and making the transaction between Uganda and other countries more expensive.
If the country is put on the blacklist, it is an advisory to other countries against transacting with Uganda because then, there would be no guarantees that money sent to Uganda or coming from Uganda is not going to fund illegal activities like terrorism, or coming from illicit sources.
Uganda’s 2016 Mutual Evaluation Report (MER) was adopted by the global monitoring body, the Financial Action Task Force (FATF).
The report made several recommendations arising from the weaknesses that were revealed by the report, showing how Uganda’s level of compliance was very low.
In January 2022, the Executive Director of the Finance Intelligence Authority, Sydney Asubo revealed that Uganda was at risk of being blacklisted by FATF unless the government made certain legal and regulatory interventions against money laundering by May 2022.
“Uganda was placed on the grey list in 2020. It means the country has been identified but it made commitments with the FATF to address the specific issues within a given time frame,” he said.
Despite taking longer than required, according to the FIA, the pieces of legislation could help the country improve her rating which is currently dubbed “Partly Compliant”.
The Anti-Money Laundering (Amendment) Bill, 2022 gives powers to state authorities like the FIA to impose sanctions including a Shs30m fine on a person or organization that violates the laws.
The law gives responsibility to persons who have the capacity and may come into contact with suspected illicit finances to detect and prevent such a transaction from happening. This may be in conjunction with the FIA.
Attorney General, Kiryowa Kiwanuka says that the Bills deal with activities under the Financial Action Task Force.
He says that six years ago, Uganda was required to carry out 40 recommendations into its financial management system and its laws governing the management of anti-money laundering and countering of terrorism financing.
“One of the things that were required to do in those recommendations was to make amendments to the seven Bills to address three fundamental aspects. Beneficial ownership is required to disclose in any entity, who the beneficial owners are if any.
The second was proliferation financing, where tools, money, premises, and other properties of persons are used to finance terrorism and then, obviously, anti-terrorism financing. The process of having the financial management systems in place was earlier interrupted by the Covid-19 pandemic, but it is dangerous if Uganda does not put in place the legislation.
“A black list will stop us from getting into the (global) financial space. Our euro transactions are done in several cities in Europe like Frankfurt, the pound transactions are done in London, and the dollars in the US. The moment you are blacklisted then these places where you would be doing these foreign currency transactions are curtailed. And that will have very, very serious effects on our country.”
Uganda has seen some financial institutions exit the market due to money laundering and among these is World remit which suspended all its sending services.
Will the New Law end Money Laundering in Uganda? Details will be unveiled in DaParrot Special Analysis soon
