Financial Crime World

Uganda Takes Stricter Stance on Anti-Money Laundering

Enhanced Regulations Aimed at Curbng Financial Crime

In an effort to protect the integrity of its capital markets and curb financial crime, Uganda has passed six key legislations aimed at enhancing anti-money laundering (AML) regulations. These laws, enacted in August 2022, require all financial institutions to implement robust policies, controls, and procedures for monitoring and addressing risks related to money laundering and terrorism financing.

Key Regulations

  • Anti-Money Laundering (Amendment) Bill, 2022: Empowers the Financial Intelligence Authority (FIA) and other supervisory authorities to levy administrative penalties for breach of the provisions of the Act.
  • Companies (Amendment) Bill, 2022: Requires all companies to make known their beneficial owners, including faceless or nameless directors.

Increased Compliance Costs

The new regulations will undoubtedly increase the compliance costs for players in the financial sector. According to banking sector regulator Bank of Uganda, all central bank-supervised financial institutions will be required to implement the new laws.

Benefits of Enhanced AML Regulations

While the increased compliance costs may be a concern for some industry players, experts argue that the benefits of enhanced AML regulations far outweigh the costs.

  • “Being in the grey list means that credible investors stay away from your destination,” said Sydney Asubo, executive director of FIA. “This impacts on foreign direct investment and can have serious consequences for the economy.”
  • According to Asubo, if money laundering is not controlled, it can lead to tax evasion, counterfeiting, and a distortion of the economy.
  • “The criminals will begin to control government policies and influence tax so as to avoid being taxed,” he warned.

Recommendations for Implementation

To ensure a smooth implementation of the new AML regulations, experts recommend that industry players invest in digital systems to enhance compliance and reduce the burden on human resources.

  • “Instead of having a person in charge of compliance, there should be a synchronised digital system where regulators can keep in the loop without necessarily having to be reported to all the time,” said Andrew Kyambadde, a legal expert on AML and illicit financial flows.