Uganda’s Trade Exposed to Money Laundering Threats

Kampala - A New Report Reveals Vulnerabilities in Uganda’s Trade

A recent report by Global Financial Integrity (GFI) has highlighted that Uganda’s trade is susceptible to money laundering threats, with certain commodities being more vulnerable than others. The report identifies plastic products, animal fats and oils, and gold as the top 15 most exposed exports to Trade-Based Money Laundering (TBML).

Top Vulnerable Commodities

Plastic products
Animal fats and oils
Gold
Petroleum products
Coffee
Tea
Cocoa
Spices
Essential oils
Pharmaceuticals
Vehicles
Electrical machinery
Cereals

These commodities have seen a significant increase in volume and value over the past six years, making them attractive targets for money launderers. The report notes that these products are often traded in cash-intensive markets with limited oversight, increasing their vulnerability to TBML.

Gold: A Key Concern

Gold has become Uganda’s biggest export, accounting for over $1.2 billion in 2019 and $1.03 billion in 2021. However, its cash-intensive nature and lack of transparency around its origin make it particularly vulnerable to TBML. The report notes that there is no clear data on the mines from which gold is sourced within and outside Uganda, making it difficult to trace its origins.

Petroleum Products: A Double-Edged Sword

Petroleum products are both Uganda’s top exports and imports, with the country importing over $1.94 billion worth of petroleum products in 2021 and exporting over $1.8 billion worth over the same period. However, this cash-intensive trade is also highly susceptible to TBML.

Stakeholder Perceptions Support Findings

The report’s findings are supported by stakeholder perceptions, which show that plastic products, animal fats and oils, gold, and petroleum products are among the most vulnerable imports to TBML.

Urgent Action Required

The Ugandan government has been urged to take urgent action to address these vulnerabilities and prevent money laundering in the country’s trade sector. It is essential for the government to implement robust measures to detect and deter TBML, including increasing transparency around commodity origin and improving oversight of cash-intensive trades.