Financial Crime World

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UGANDA REMOVED FROM FATF GREY LIST: A LANDMARK MILESTONE IN COMBATING MONEY LAUNDERING AND TERRORIST FINANCING

Kampala, Uganda - September 2023

In a significant development, Uganda has been removed from the Financial Action Task Force (FATF) “Grey List” after demonstrating a robust commitment to combating money laundering and terrorist financing. The FATF, an inter-governmental organization that sets international standards for anti-money laundering (AML) and counter-terrorism financing (CTF), recognized Uganda’s efforts in strengthening its AML/CFT regime.

Background

The removal from the Grey List marks a significant milestone in Uganda’s financial landscape, underscoring the country’s commitment to upholding robust AML/CFT measures. The FATF had identified several strategic deficiencies in Uganda’s AML/CFT regime, which necessitated enhanced monitoring and corrective actions.

Key Recommendations

To address these concerns, Uganda embarked on a collaborative journey with the FATF and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to fortify the effectiveness of its AML/CFT regime. The country developed and implemented risk-based supervision of financial institutions and designated non-financial businesses and professions in conformity with the directives of the FATF.

Key Legislative Changes

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. In response, Ugandan lawmakers enacted amendments and regulations aligned with FATF recommendations and standards.

  • Companies (Amendment) Act 2022: This act introduced significant changes to the Companies Act, including the requirement for companies to maintain comprehensive registers of their beneficial owners.
  • Partnership (Amendment) Act 2022: This act amended the Partnership Act to include provisions related to the registration and maintenance of partnership agreements.
  • Trustees Incorporation (Amendment) Act 2022: This act introduced changes to the Trustees Incorporation Act, including the requirement for trustees to maintain records of beneficial owners.

Regulations

The Companies (Beneficial Owners) Regulations, 2023, mandate entities such as partnerships, trusts, and companies to maintain comprehensive registers of their beneficial owners. The required information includes:

  • Names
  • Postal addresses
  • National identification numbers
  • Dates of entry and cessation as beneficial owners
  • Any other details as may be prescribed by regulations

Penalties for Non-Compliance

Non-compliance with these regulations carries substantial penalties, including the refusal of subsequent filings on the company file and statutory fines of UGX 500,000/= (Uganda Shillings Five Hundred Thousand Shillings only) or USD 135 (United States Dollars One Hundred Thirty-Five) per corporate officer for every day of default.

Conclusion

The implementation of these measures is expected to contribute to the overall stability of the financial system, enhance investor confidence, and facilitate international cooperation enabling Uganda to engage more seamlessly in cross-border transactions.