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Money laundering: Uganda struck off grey list after reforms

Uganda has been on the grey list since 2020

Uganda has been on the grey list since 2020

Uganda has been struck off the grey list of the Financial Action Task Force (FATF), a categorization that risked the Ugandan financial industry being blacklisted.

The grey list acts as a warning to a country that other countries, authorities and the international community will take caution while dealing with it in matters regarding financial transactions. Failure to take measures to improve this image may lead to blacklisting the country, which is equivalent to an advisory that the country is unsafe to do business with, as money to or from the country could be from, or destined for money laundering and terrorism financing activities. 

The exit from the grey list is regarded as “a significant milestone in the country's dedication to enhancing financial transparency and combating money laundering and terrorist financing” according to the Financial Intelligence Authority (FIA) of Uganda.  

Since queries arose about Uganda's ability to prevent money laundering and financing of terrorist activities, international transactions have met increased scrutiny, leading to delays in completing vital businesses. Other complaints included either failure to receive expected money from aboard, or receiving much less than expected, while some money transfer services and investor brokers suspended their activities.   

FATF, an intergovernmental organization that sets global standards for combating illicit finance, placed Uganda on its grey list in February 2020 due to concerns regarding deficiencies in anti-money laundering and counter-terrorism financing (AML/CFT) measures. 

Uganda then embarked on instituting and implementing a series of rigorous reforms to demonstrate its readiness to align its financial regulations with international standards. The government initiated key AML/CFT reforms intended to improve the robustness of Uganda's systems to deal with money laundering and terrorism financing. 

The decision to delist Uganda from the grey list was communicated by the FATF president, T.Raja Kumar while announcing the outcomes of the fifth plenary meeting which took place in Paris, France last week. 

The said reforms include included adopting a national AML/CFT, CPF (countering of proliferation financing) strategy; enhancing the use of mutual/legal assistance and maintaining comprehensive statistics; and enhancing the ability of the law enforcement agencies to conduct terrorism financing investigations and prosecutions. 

The country also had to develop and implement risk-based supervision of the financial and designated non-financial business and professionals sectors. This also included ensuring that law enforcement agencies and judicial authorities apply the ML offence consistent with the identified risks as well as establishing procedures to trace and seize proceeds of crime. 

Other reforms undertaken were implementing proliferation financing-related targeted financial sanctions; strengthening the capacity of relevant AML/CFT ministries, departments and agencies to implement the said reforms effectively and sustainably. 

"Uganda's exit from the FATF grey list is a testament to our unwavering commitment to fostering a transparent and secure financial environment. It reflects the concerted efforts of our government and regulatory authorities to strengthen our AML/CFT framework and safeguard our financial system from illicit activities," said Samuel Were Wandera, FIA executive director. 

Since the grey-listing, the government made what it calls a high-level political commitment to work with FATF and the Eastern and Southern Africa Anti Money Laundering Group (ESAAMLG). 

"Government of Uganda has been actively working to strengthen the effectiveness of its anti-money laundering/countering financing of terrorism (AML/CFT) regime to implement the action plan agreed to, with the FATF which comprised of 22 action items."

FIA executive director assured the FATF delegates, Ugandans and the international community of Uganda's commitment to consolidating the highlighted achievements attained during the period and to further strengthen the AML/CFT/CPF regime. 

“This shall be achieved through strengthening the national task force to effectively coordinate an all-government approach to the crimes, increased engagements with the private sector to aggressively embrace the various measures and strengthening the capacity of the institutions involved in the fight against ML/TF crimes.” 

Uganda's successful exit from the FATF grey list not only reinforces the country's reputation as a responsible member of the global financial community but also enhances its attractiveness to investors and facilitates greater access to international financial markets.

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