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Beneficial Ownership Transparency Crucial in Tackling Illicit Financial Flows in Uganda

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The Problem: Uganda’s Annual Losses to Illicit Financial Flows

Uganda loses over UGX 2 trillion annually to illicit financial flows, with corruption, money laundering, organized crime and tax evasion being major contributors. These activities often involve the use of companies and other legal entities as fronts to hide identities and conceal ill-gotten gains both locally and globally.

The Role of Anonymous Companies in Illicit Activities

A lack of information on company ownership hinders the government’s ability to track these offenders and recover valuable tax revenue. Beneficial ownership transparency, which involves identifying individuals who own, control, and benefit from a company or entity, is key in unmasking criminals and curbing the use of anonymous companies for illicit activities.

The Global Push for Beneficial Ownership Transparency

Globally, beneficial ownership transparency has emerged as an essential tool in combating illicit financial flows. However, in Uganda, the absence of this critical information enables individuals to easily stash and hide their wealth using shell companies and offshore trusts.

Case Studies: How Ugandan Officials Exploit Anonymous Companies

A report by GFI and ACODE examines case studies where Ugandan officials used these methods to conceal their wealth, demonstrating how the failure to collect beneficial ownership information is exploited by those seeking to move illicit funds undetected.

A Guide for Implementing a Robust Beneficial Ownership Law in Uganda

Drawing on benchmarking examples from African countries with strong beneficial ownership legislation, the report provides a guide for implementing a robust beneficial ownership law in Uganda.

The Risks of Inaction: Continued Losses and Compromised Economic Stability

Experts warn that without such measures, Uganda risks continued losses to illicit financial flows, compromising its economic stability and undermining efforts to combat corruption and money laundering.