Samuel Were Wandera, the executive director of Uganda's Financial Intelligence Authority (FIA), recently issued a notice on February 23, 2024, congratulating all Ugandans and the government upon Uganda's removal from the Financial Action Task Force (FATF) grey list.
This excitement follows extraordinary moves by Ugandan stakeholders that ensured an evolution in the country's financial landscape over the years through well thought-out reforms. Unfortunately, in a typical one steps forward, two steps back, Kenya and Tanzania were added to the financial grey list.
Uganda's removal from the financial grey list will have wide and far-reaching implications especially on its economic growth. It fits within Uganda's Vision 2040 of attaining economic independence and sustained growth.
The grey list is a register that highlights countries that have significant shortfalls in tackling money laundering. These shortfalls can be legal, institutional or structural. By removing Uganda from the financial grey list, it means that Uganda has eventually meet the standards set by FATF to combat the legitimization of illegally obtained money.
The FATF is a global inter-governmental organization started as an initiative of the G7 countries with an aim of developing policies to combat money laundering and terrorism financing. Over the last few years, Uganda has exhibited several institutional reforms that have enabled a strong legal regime that has significantly discouraged money laundering but also encouraged effective action against the culprits and perpetrators of money laundering.
Uganda, however, needs to be careful and show a continued momentum to implementing Anti Money Laundering reforms to avoid the risk of re-listing. Countries, for instance Kenya and Tanzania, that do not consistently observe and implement the institutional and structural reforms put in place to fight money laundering are always relisted on the financial grey list.
FATF usually comes up with action plans to be implemented by countries that have been grey-listed. Despite complying with these action plans, where the compliance does not translate into longer-term results, the FATF has a mandate to place any country back onto the grey list.
A case in point is Uganda which, under the Financial Intelligence Authority, had reported several improvements in its fight against money laundering having been grey listed in October, 2013. In February 2014, the minster for Finance, Planning and Economic Development, made high-level commitments to address the noted deficiencies through the action plan developed by the FIA.
Subsequently, several laws were enacted including the Anti-Money Laundering (Amendment) Act 2017, Anti-Money Laundering Regulations 2015, Anti-terrorism (Amendment) Acts of 2015, 2016, 2017 and the Anti-Terrorism Regulations 2016.
As part of its institutional reforms, Uganda also established the Financial Intelligence Authority in 2014 to coordinate the country's efforts in fighting money laundering. It also joined notable international institutions like the Egmont Group of Financial Intelligent Units in 2019. This was a measure to enhance cross-border collaboration in the fight against money laundering.
As a result of this progress, Uganda was removed from the financial grey list in November 2017. Unfortunately, due to several inconsistencies and inability to translate the initial compliance objectives and action plan goals into long term results, Uganda was re-listed in February 2020.
The reasons for Uganda's relisting to the financial grey list are a mistake that Uganda cannot afford to repeat as falling back onto the list could be economically and financially disastrous to the country.
Therefore, in order for the country to maximally sustain its stature as a one that is willing to fight against money laundering, there is need to understand the mistakes or structural inadequacies that resulted into its re-listing in the first place.
As an international regulatory body, the FATF normally makes several recommendations following periodic reviews of a country's performance. In the October, 2023 action points, for example, Uganda as required to implement and accord a timely access to beneficial ownership information for companies and other entities, and to increase awareness and conduct training for financial institutions and designated non-financial businesses and professions.
This was religiously done by Uganda. Notably, the fight against money laundering is not a fight that a third world country like Uganda can take up on its own. There is need for concerted efforts in order to achieve the objectives set in the action plan. This calls for a joint East African Community fight against money laundering.
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Instead of inward-looking reforms, collective efforts, for example instituting an East African Financial Intelligence Authority, would be more fundamental in this fight. In fact, countries like Kenya and Tanzania would not have been re-listed had there been an East African body poised with the duty to fight money laundering.
For this to be achieved, Kenya and Tanzania need to fast-track their removal from the grey list by implementing the recommendations made in the action plan developed specifically for them.
Kenyan and Tanzanian Authorities, in conjunction with their Finance ministries, should make high-level resounding political commitments to the action plan and commit to the set timeframe for implementation. Once this is done, potentially, the joint fight against money laundering will be won also in the East African region.
The writer is an advocate of the High court
