The Executive Director of the Finance Intelligence Authority, Sydney Asubo revealed that Uganda risks being blacklisted by the Financial Action Taskforce (FATF) if the government does not tackle money laundering by May 2022.
Asubo who was appearing before the Committee on Finance said that the FATF maintains a watch list of countries that have significant shortfalls in tackling money laundering categorised under the grey list and the black list.
“Uganda was placed in the grey list in 2020. It means the country has been identified but it made commitments with the FATF to address the specific issues within a given time frame,” he said.
Asubo added that the FATF wrote to the Minister of Finance who wrote back making commitments to address the identified issues by January 2022 but later pushed to May 2022 because of the impact of Covid-19.
“Unfortunately, a number of issues are still outstanding so the FATF is concerned and has written that if these issues are not addressed, then the country will be moved to the blacklist,” he said.
Asubo said the consequences are dire because the impact of being on the grey list means that the world is aware that the country is having challenges in addressing money laundering.
“Some people have already started feeling the impact especially international transactions which would take a day or two, are now taking a week or two. That process of scrutiny is beyond the normal scrutiny,” he said.
According to the FATF evaluation, Uganda was deemed largely complaint for five of the FATF 40 Recommendations.
Asubo said that whilst the FIA has largely played its role in fulfilling the requirements, other ministries, departments and agencies are falling behind, including those that are under the Ministries of Finance, Internal Affairs and Justice.
“I am happy to report that all the things that FIA was supposed to do have been done. The obligation to fulfil those requirements lies not only on the FIA,” he said.
He said that in the 2020/2021 financial year, the authority received and analysed 2,419 suspicious transaction reports (STRs).
“Out of the 2,419 STRs received and analysed, 76 intelligence reports were generated and disseminated to various law enforcement agencies for further investigations,” said Asubo.
He however, urged lawmakers to allocate Shs12.2 billion to cater for unfunded priorities, which include staffing, information and communication technology and public awareness among others to enable the Authority carry out its mandate.
According to the Budget Framework Paper (BFP) for 2022/2023 financial year, the authority has been allocated Shs16.7 billion.
“The Shs16.7 billion means that we shall not be able to recruit and yet the mandate of the authority is huge compared to the current staffing level. The volume of work is big and the backlog is beginning to build up,” Asubo said.
To meet the required staffing level, Asubo said, the authority requires Shs2.5 billion.
“Right now we are 43 staff, against the approved structure of 83 for the head office,” he said.
Asubo added that the Authority requires additional funding of Shs2.8 billion to enhance ICT. He said that the current allocation to ICT is Shs800 million and yet they need Shs3.7 billion.
“ICT is very critical because if we do not safeguard our systems then there will be mayhem in this country. The information we keep is highly confidential and if the people who supply us with this information become jittery about the safety of the information, they may become reluctant in sharing information,” Asubo said.
The meeting was chaired by Hon Jane Pacuto
The Committee Vice-Chairperson, Jane Pacuto challenged the FIA to address the allegations that one of the reasons why Uganda has been pushed to the grey list is because of the illicit entry of gold from countries like Venezuela.
“What is your authority doing to address this because gold is closely associated with money laundering,” said Pacuto.
Hon. Herbert Tayebwa (NRM, Kashongi County) questioned the capacity of the authority in fighting money laundering saying that majority of the work is undertaken by the Police force.
“FIA is existing and yet Uganda is on the grey list. This is perturbing and means that you are not doing your work,” he said.
The core mandate of FIA is fighting money laundering and countering the financing of terrorism/proliferation and other financial crimes.