Financial Crime World

Financial Sanctions Enforcement in Uganda: A Review

Kampala, July 15, 2022 - The Financial Action Task Force (FATF) has completed a review of the implementation of its revised standards on anti-money laundering and counter-terrorism financing (AML/CFT) in Uganda.

Assessment of Implementation

The report highlights that money laundering and terrorism financing risks have changed since June 2019, with an increase in virtual asset-related transactions. It also notes that some jurisdictions have made significant progress in implementing the revised standards, while others still need to strengthen their AML/CFT frameworks.

Sanctions Regime in Uganda

In Uganda, the sanctions regime consists of both criminal and administrative penalties:

  • Criminal Penalties: Section 136 of the Anti-Money Laundering Act (AMLA) provides for criminal penalties for money laundering offenses.
  • Administrative Sanctions: Section 21(paa) gives powers to the Financial Intelligence Authority to impose administrative sanctions on accountable persons who fail to comply with directives or guidelines.

Weaknesses in Implementation

The report identifies several issues with the implementation of the revised standards in Uganda, including:

  • Weaknesses in Customer Due Diligence: Some financial institutions are not conducting adequate customer due diligence.
  • Reporting Requirements: Some institutions are struggling to meet reporting requirements.
  • AML/CFT Measures: Some financial institutions are still struggling to implement effective AML/CFT measures.

Recommendations for Improvement

The FATF has recommended that Uganda take steps to address these weaknesses and strengthen its AML/CFT framework. Specifically:

  • Improve Coordination: The country must improve coordination between financial intelligence units and law enforcement agencies.
  • Enhance Sanctions Regime: Uganda should list more individuals and entities connected to terrorism financing and money laundering on its Specially Designated Nationals (SDN) list.

Next Steps

The Financial Intelligence Authority has promised to work closely with the Ministry of Finance, Planning and Economic Development to implement the recommendations made in the report. The authority has also pledged to strengthen its oversight and enforcement powers to ensure that financial institutions comply with AML/CFT regulations.

Conclusion

Uganda’s efforts to improve its AML/CFT framework are critical to preventing financial crimes and combating terrorism financing. The country must continue to work closely with international partners, such as the FATF, to address these challenges and protect its financial system.