Pressure mounts on Uganda to pass law against ‘dirty’ money

Marines arrest suspected pirates in the Gulf of Aden. Money obtained from piracy among other crimes are easily transacted in Ugandan banks. Photo/REUTERS

Leading financial institutions in Uganda plus the World Bank and International Monetary Fund want the government to enact anti-money laundering laws, which other countries in the region have passed.

This comes in the wake of increased acts of piracy in the Indian Ocean, corruption and drug trafficking, which have put Uganda at the risk of becoming a destination for crime-monies.

State Minister of Finance Fred Jachan Omach said: “Kenya and Tanzania have already passed this Bill, and Uganda could become a conduit for the loot and counter-financing of terrorism.”

A series of meetings on money laundering and related crimes have taken place in Uganda in recent weeks, with a view to speeding up the passing of the Anti-Money Laundering (AML) Bill, 2009.

Bank of Uganda Governor Emmanuel Tumusiime Mutebile said criminals were taking advantage of the lack of laws while financial institutions were forced to rely on guidelines issued by the BoU, when conducting transactions. But they say these guidelines are limiting.

“They (guidelines) need to be reinforced by law...without which we cannot take action against perpetrators,” Mr Mutebile said.

It emerged at one of the meetings that there is a link between the growing influence of Somali nationals in business within East Africa and the piracy menace in the Indian Ocean.

Kenyan Consultant Researcher George Kegoro named real estate, construction and oil as among the leading sectors where proceeds from piracy are being invested.

The Central Bank issued directives requiring transactions that surpass the Ush20 million ($10,025) mark to be settled through electronic fund transfer.

However, the bone of contention is that 90 per cent of the population is unbanked.

The AML Bill prescribes heavy penalties for defaulters — a fine of 150,000 currency points — equivalent of Ush3 billion ($1.5 million) or 15 years imprisonment upon conviction.

It also sets terms of extradition for both nationals and non-nationals, as well as the confiscation of a convicted person’s properties.

In 1999, the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) was founded in Arusha to combat money laundering in the region.

The group’s members include Uganda, Botswana, Kenya, Lesotho, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Seychelles, Tanzania, Zambia and Zimbabwe.

Uganda signed the Memorandum of Understanding in 2002, but is yet to legislate it.

Failure to comply means the country’s transparency rating among credit institutions and investors would be dented further.