Uganda has been moved out of the grouping of economies considered prone to illicit financial transactions and terror financing. This follows the approval of global financial watchdog, Financial Action Taskforce International Cooperation Review Group (TAFT/ICRG) which recently endorsed steps taken by Uganda to curb money laundering.
A FATF Plenary meeting held in Argentina on November 2 approved the ICRG recommendation to remove Uganda from the TAFT ‘grey list’. The Minister of Finance, Matia Kasaija said on Thursday that this was as a result of government’s compliance to strengthen its laws and institutions against illict money flow in and outside Uganda.
Any country included on the grey list is considered unsafe especially by those looking to invest money in addition to the uncertainty due to terrorism risks.
Uganda was placed under the FATF in 2014, at the request of government and has since made regular reports on its progress in curbing money laundering and terrorism financing.
The removal from the grey list implies that Uganda will no longer be subjected to the stringent compliance process by FATF.
“This means that Uganda’s financial system is now robust enough to adequately identify and address all money laundering and financing of terrorism risks,” Minister Kasaija told journalists at a press briefing at Uganda Media Centre on Thursday.
He said the approval by the global watchdog will bolster correspondent banking, foreign direct investment, capital flow and spur economic growth. The same barrier had kept Uganda in the low ranked countries by the annual World Bank doing business index.
Notable among the enabling legal framework adopted by Uganda upon which it was given a green light are; amendments in the Anti-Terrorism Act (2015) which criminalized financing of terrorism as well as Anti-Money Laundering Act (2017) which set standards for record keeping requirements for all financial institutions.
“The same 2013 Anti-Money Laundering Act established the Financial Intelligence Authority (FIA) which monitors all illicit money transactions in Uganda. The law empowers to look into personal accounts,” Kasaija said.
Other laws that have been enacted to tighten the grip on illict financial flows include the Financial Institutions Act, Capital Markets Act and the Narcotic Drugs and Psychotropic Substances Act.
The Minister stressed that illicit money makes the economy volatile and urged Ugandans to refrain from hiding colossal sums of money in their houses as this devalues the money and hampers economic growth.
In clarifying what the development means for Uganda, Michael Olupot, the Deputy Executive Director of the Financial Intelligence Authority (FIA) said this galvanizes the confidence of the international community in Uganda’s financial systems.
“International banks can now relate with our local banks which they have always considered as risky. There were gaps that could be exploited for illegal transactions but they have been fixed,” Olupot said.
He cited cases in which people have pleaded guilty and been convicted of money laundering since the new laws were enacted.