Introduction - Problem statement
- Uganda is on the FATF List of Countries that have been identified as having strategic AML deficiencies
- FATF Statement re AML Strategic Deficiencies: 25 June 2021
- Since February 2020, when Uganda made a high-level political commitment to work with the FATF and ESAAMLG to strengthen the effectiveness of its AML/CFT regime, Uganda has taken some steps towards improving its AML/CFT regime, including by adopting the National AML/CFT Strategy in September 2020 and completing the ML/TF risk assessment of legal persons and arrangements
- The last follow-up to the Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Uganda was undertaken in 2020
- According to that Evaluation, Uganda was deemed Compliant for 14 and Largely Compliant for 5 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness & Technical Compliance ratings
- Uganda was deemed a 'Monitored' Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR).
- Key Findings from the report are as follows: -
- Only 20 percent of Ugandans have deposits in the formal banking sector, with the rest of the populace relying on cash transactions or alternative forms of banking. Money transfers and payments through mobile phones (Mpayments), for instance, have become key providers of basic, if informal, financial services for low-income earners who cannot afford the charges levied by the formal banking system.
- Uganda's cash-based informal economy provides a fertile environment for money laundering. Its lack of intellectual property rights legislation feeds a large black market for smuggled and/or counterfeit goods.
- Currently, most laundered money comes from domestic proceeds, much of which stems from unchecked corruption.
- Real estate and casino operations are of particular concern.
- Uganda's inability to monitor formal and informal financial transactions, particularly informal trade along porous borders with South Sudan, Kenya, Tanzania, and the Democratic Republic of Congo, could render Uganda vulnerable to more advanced money laundering activities and potential terrorist financing.
- Uganda's black market takes advantage of these borders and the lack of customs and tax collection enforcement capacity.
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