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Uganda’s CFT Regulations: A Significant Milestone Achieved
On February 23, 2024, Uganda made significant strides in its fight against money laundering and terrorist financing as it was removed from the Financial Action Task Force (FATF) “Grey List”. This achievement recognizes Uganda’s commitment to combating these financial crimes, elevating its global standing in the realm of financial security.
Background
The FATF Grey List comprises countries identified with strategic deficiencies in their Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regimes. Since February 2020, Uganda has embarked on a collaborative journey with the FATF and the Eastern and Southern Africa Anti-Money Laundering Group to fortify its AML/CFT regime.
Uganda’s AML/CFT Framework
Uganda’s AML/CFT framework, established through the Anti-Money Laundering Act of 2013 and the Anti-Money Laundering Regulations of 2015, forms the legal basis for combating money laundering and terrorist financing. However, legislative existence alone does not guarantee effective implementation of AML/CFT strategies.
Implementing Risk-Based Supervision
To address this, Uganda developed and implemented risk-based supervision of financial institutions and designated non-financial businesses and professions in conformity with FATF directives. The FATF outlined specific recommendations for Uganda, emphasizing the adoption of national cooperation and coordination for AML policies and the implementation of measures to ensure effective monitoring and compliance within money or value transfer services.
Legislative Changes
In response to these concerns, Ugandan lawmakers enacted amendments and regulations aligned with FATF recommendations and standards. These legislative changes mandate entities such as:
- Partnerships
- Trusts
- Companies to maintain comprehensive registers of their beneficial owners.
The Companies (Beneficial Owners) Regulations of 2023 require companies to maintain registers containing beneficial ownership information and promptly notify the registrar of companies through the filing of a beneficial ownership form at the Uganda Registration Services Bureau. Non-compliance with these regulations carries substantial penalties.
Significance
Uganda’s removal from the FATF Grey List marks a significant milestone in the financial landscape, ushering in an era defined by heightened regulatory compliance and enhanced transparency. This achievement underscores Uganda’s commitment to adhering to international AML/CFT standards, paving the way for broader access to financial markets and increased foreign investment inflows.
Benefits
The implementation of risk-based supervision of financial institutions and designated non-financial businesses and professions enables Uganda to identify and mitigate potential risks more effectively, thereby contributing to the overall stability of the financial system. All in all, aligning Uganda’s AML/CFT strategies with FATF directives not only enhances Uganda’s standing in the global financial community but also facilitates international cooperation, enabling Uganda to engage more seamlessly in cross-border transactions.
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