Business mogul Sudhir Ruparelia's footprint within Uganda's financial industry has been further cut short after the licenses to four of his forex bureaus expired at the end of last year and were not renewed.
It is not clear whether it was Ruparelia's decision to relinquish the licenses voluntarily or Bank of Uganda's decision not to renew them. However, a source within Bank of Uganda has told us that the central bank was suspicious of some laundered money being channeled through the forex bureaus, and was, therefore, reluctant to renew the licenses
In another instance, Ruparelia's troubles mirror a wider problem that the businessman continues to face in what some sections of the public have defined as a witch-hunt. Ever since Crane bank, where he was the single biggest shareholder, was closed in October 2016, the clampdown on a number of his businesses has been intense, the latest being the forex bureaus.
The central bank announced on Wednesday that Crane Forex Bureau limited (Nile Avenue), Crane forex bureau (Kampala road) Limited, Karibu Forex Bureau Limited, and Redfox bureau limited would not have their licenses renewed.
Benedict Ssekabira, the director for commercial banking at Bank of Uganda, told reporters on Wednesday that they had closed them because owners and board of directors lacked "fitness and probity."
Stanhope forex bureau, a subsidiary of the Ruparelia group, remains open, though. Ruparelia still manages Crane management services, his holding firm that runs his real estate empire.
"They are not the first ones to be closed and won't be the last one," Ssekabira said of the forex bureaus.
However, The Observer has been told that the issue of money laundering played a key role in the central bank's focus on the forex bureaus.
"They [closed forex bureaus] are linked to money laundering," the source said. "We are at a time when the world is looking at us... We're involved in South Sudan, Somalia, refugees are flowing, and [we are close to] DRC. This raises the risks of laundering. Any links or suspicion will get you closed."
Forex bureaus are expected to renew their licenses annually. BOU reviews their activities and if there are issues it is uncomfortable with, they are denied license.
We asked Sudhir Ruparelia to comment on this story but he declined to reply to out request. We also asked Rajiv Ruparelia, a key staff of the Ruparelia group, about the troubles in the group and he, too, declined to comment.
The closure of the forex bureaus comes three months after Crane bank was sold to Dfcu bank over failure to maintain the required minimum capital. It was later found that the bank had been engaged in prohibited insider lending and that it had conspired with auditors to paint a glowing picture of its performance.
Ruparelia's troubles were also worsened by a forensic audit that found gross indiscipline in the way he managed his businesses in the financial sector, our source intimated. The forensic audit into Crane bank was completed and the report remains within Bank of Uganda.
"The USA is particularly watching us," said the source. "They are very hard on anti-money laundering laws and anti-terrorism financing."
The Uganda Anti-Money Laundering Act was first passed in 2013, following pressure from the Financial Action Task Force (FATF), a global movement fighting dirty money, and bodies such as the International Monetary Fund, World Bank, and the UN.
In that year, the US-based Global Financial Integrity (GFI), which works to expose illegal financial flows, reported that Uganda was the biggest recipient of illicit financial flows in East Africa, reaching $1.1bn in 2008.
In its annual supervision report last year, Bank of Uganda warned there was a high risk that commercial banks, forex bureaus and other money remitters in the country were not doing enough to scrutinize suspicious transactions, raising concerns that 'dirty' money could be entering the country.
The Eastern and Southern Anti-Money Laundering Group (ESAAMLG), an organisation composed of states in east and southern Africa, said in a report last year that financial institutions and designated non-financial businesses and professions in Uganda did not "adequately apply anti-money laundering and combating financial terrorism preventive measures commensurate with their risks."
Last month, Uganda was forced to make amendments to its anti-money laundering laws, with the ESAAMLG report indicating that the supervisory regime in the country was not as strong as it should be.
Uganda is particularly seen as a fluid transit route for drug smugglers and wildlife poachers. Most of the times, these people seek to sanitize their cash through the available institutions, including banks and forex bureaus.