IMF urges Uganda to step up fight against money laundering

IMF urges Uganda to step up fight against money laundering

The International Monetary Fund (IMF) has advised Uganda to improve its implementation of the anti-money laundering action plan that it agreed with the Financial Action Task Force (FATF) in order to get off the grey list.

The grey list is a list of countries that have strategic deficiencies in their anti-money laundering and combating the financing of terrorism (AML/CFT) regimes. The IMF said that Uganda’s progress in addressing these deficiencies has been slow and uneven, and that more efforts are needed to enhance its compliance with the FATF standards.

What is the grey list and why does it matter?

The grey list is a public document that is issued by the FATF, an inter-governmental body that sets global standards and monitors countries’ compliance with AML/CFT measures. The grey list identifies countries that have committed to addressing their AML/CFT deficiencies through an action plan, but have not yet completed it. The grey list is updated three times a year, based on the FATF’s assessment of each country’s performance.

Being on the grey list can have negative consequences for a country’s reputation, access to finance, and economic development. For example, being on the grey list can increase the cost and difficulty of doing business with other countries, as they may impose enhanced due diligence and reporting requirements on transactions involving grey-listed countries. Being on the grey list can also affect a country’s ability to attract foreign investment, trade, and aid, as potential partners may perceive a higher risk of money laundering and terrorist financing in grey-listed countries.

What are Uganda’s AML/CFT challenges and how can it overcome them?

Uganda was placed on the grey list in February 2020, after the FATF found that it had serious AML/CFT deficiencies, such as inadequate legal and institutional frameworks, weak supervision and enforcement, low conviction rates, and lack of international cooperation. Uganda agreed to implement an action plan with 11 items to address these deficiencies by February 2022.

According to the IMF, Uganda has made some progress in implementing its action plan, such as enacting new laws and regulations, establishing a financial intelligence authority, and conducting risk assessments.

However, the IMF also noted that Uganda still faces significant challenges in fully complying with the FATF standards, such as improving its understanding and mitigation of risks, enhancing its investigation and prosecution capabilities, strengthening its supervision and sanctions regime, and increasing its cooperation with other countries.

The IMF recommended that Uganda should accelerate its implementation of the action plan by allocating sufficient resources, enhancing coordination among relevant agencies, providing adequate training and guidance, and ensuring effective monitoring and evaluation.

The IMF also urged Uganda to engage constructively with the FATF and its regional body, the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), to demonstrate its commitment and progress.