Esaamlg uganda-mutual-evaluation-report-ratings-findings

Anti-money laundering and counter-terrorist financing measures in Uganda – Mutual Evaluation Report – April 2016 1

Anti-money laundering and counter-terrorist financing (AML/CTF) measures in Uganda Mutual Evaluation

Key findings, ratings and priority actions April 2016 www.fatf-gafi.org/topics/mutualevaluations/documents/mer-uganda-2016.html

http://www.fatf-gafi.org/topics/mutualevaluations/documents/mer-ethiopia-2015.html










Anti-money laundering and counter-terrorist financing measures in Uganda – Mutual Evaluation Report – April 2016

Ratings – Effectiveness (1/3)

2

Immediate outcome of an effective system to combat money laundering (ML) and terrorist financing (TF)

Extent to which Uganda has achieved this objective

1. ML and TF risks are understood and, where appropriate, actions co-ordinated domestically to combat ML and TF

Low

2. International co-operation delivers appropriate information, financial intelligence, and evidence, and facilitates action against criminals and their assets

Low

3. Supervisors appropriately supervise, monitor and regulate financial institutions and designated non-financial businesses and professions (DNFBPs) for compliance with AML/CFT requirements commensurate with their risks.

Low

4. Financial institutions and DNFBPs adequately apply AML/CFT preventive measures commensurate with their risks, and report suspicious transactions.

Low



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5. Legal persons and arrangements are prevented from misuse for money laundering or terrorist financing, and information on their beneficial ownership is available to competent authorities without impediments

Low

6. Financial intelligence and all other relevant information are appropriately used by competent authorities for money laundering and terrorist financing investigations.

Low

7. Money laundering offences and activities are investigated and offenders are prosecuted and subject to effective, proportionate and dissuasive sanctions

Low

8. Proceeds and instrumentalities of crime are confiscated. Low



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9. Terrorist financing offences and activities are investigated and persons who finance terrorism are prosecuted and subject to effective, proportionate and dissuasive sanctions.

Low

10. Terrorists, terrorist organisations and terrorist financiers are prevented from raising, moving and using funds, and from abusing the non-profit sector.

Low

11. Persons and entities involved in the proliferation of weapons of mass destruction are prevented from raising, moving and using funds, consistent with the relevant United Nations Security Council Resolutions.

Low


Ratings – Effectiveness

5

0 0 0

11

HighSubstantialModerateLow


Ratings – technical compliance (1/5)

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AML/CFT POLICIES AND COORDINATION1. Assessing risks & applying a risk-based approach Non No Non Non Non compliant2. National cooperation and coordination par par par par partially compliantMONEY LAUNDERING AND CONFISCATION3. Money laundering offence par par par par partially compliant4. Confiscation and provisional measures larg larg larg larg largely compliantTERRORIST FINANCING AND FINANCING OF PROLIFERATION5. Terrorist financing offence Non No Non Non Non compliant6. Targeted financial sanctions related to terrorism & terrorist financing Non No Non Non Non compliant7. Targeted financial sanctions related to proliferation Non No Non Non Non compliant8. Non-profit organisations Non No Non Non Non compliant



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PREVENTIVE MEASURES9. Financial institution secrecy laws comcomcomcom compliantCustomer due diligence and record keeping10. Customer due diligence par par par par partially compliant11. Record keeping No No Non Non Non compliantAdditional measures for specific customers and activities12. Politically exposed persons No No Non Non Non compliant13. Correspondent banking comcomcomcom compliant14. Money or value transfer services par par par par partially compliant15. New technologies No No Non Non Non compliant16. Wire transfers No No Non Non Non compliant



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PREVENTIVE MEASURES (continued)Reliance, Controls and Financial Groups17. Reliance on third parties No Non No No Non compliant18. Internal controls and foreign branches and subsidiaries No Non No No Non compliant19. Higher-risk countries No Non No No Non compliantReporting of suspicious transactions20. Reporting of suspicious transactions No Non No No Non compliant21. Tipping-off and confidentiality comcomcomcom compliantDesignated non-financial Businesses and Professions (DNFBPs)22. DNFBPs: Customer due diligence par par par par partially compliant23. DNFBPs: Other measures par par par par partially compliant

Anti-money laundering and counter-terrorist financing measures in Uganda – Mutual Evaluation Report – April 2016 16-Sep-16 9


TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL PERSONS AND ARRANGEMENTS24. Transparency and beneficial ownership of legal persons No Non Non No Non compliant25. Transparency and beneficial ownership of legal arrangements No Non Non No Non compliantPOWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES AND OTHER INSTITUTIONAL MEASURESRegulation and Supervision26. Regulation and supervision of financial institutions No Non Non No Non compliant27. Powers of supervisors No Non Non No Non compliant28. Regulation and supervision of DNFBPs No Non Non No Non compliantOperational and Law Enforcement29. Financial intelligence units par par par par partially compliant30. Responsibilities of law enforcement and investigative authorities par par par par partially compliant31. Powers of law enforcement and investigative authorities par par par par partially compliant32. Cash couriers No Non Non No Non compliant

Anti-money laundering and counter-terrorist financing measures in Uganda – Mutual Evaluation Report – April 2016 16-Sep-16 10


POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES AND OTHER INSTITUTIONAL MEASURES (continued)General Requirements 33. Statistics No No No Non Non compliant34. Guidance and feedback par par par par partially compliantSanctions35. Sanctions par par par par partially compliantINTERNATIONAL COOPERATION36. International instruments comcomcomcom compliant37. Mutual legal assistance par par par par partially compliant38. Mutual legal assistance: freezing and confiscation par par par par partially compliant39. Extradition No No No Non Non compliant40. Other forms of international cooperation par par par par partially compliant


Ratings – technical compliance

11

4 1

14

21

Compliant

Largely compliant

Partially compliant

Non compliant


Key findings

Uganda's AML/CFT regime, despite the risks it is facing

particularly on TF, is still not that developed. The AMLA covers all but one of the designated categories of offences in the FATF Glossary. The offences of illicit trafficking in narcotic drugs and psychotropic substances are not criminalised. Although, TF poses a huge risk to Uganda, amendments to the Anti-Terrorism Law to criminalise the offence of TF were only passed during the time when the assessment team was on-site. However, the amendments still do not fully criminalise the offence of TF consistent with the FATF requirements. The activities relating to corruption, abuse of public resources, fraud, smuggling in wildlife products and gold, trafficking in drugs and tax evasion are of significant risk to the AML/CFT regime of Uganda.

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Key findings

The authorities of Uganda have not yet conducted a National Risk Assessment, and judging by the interviews conducted with the authorities during the on-site visit, there is still a very low understanding of ML risks. However, despite the absence of an NRA, the authorities have a good understanding of the risks relating to terrorism (excluding TF risks). The authorities carried out parallel financial investigations in one or two cases of terrorism. Cooperation and coordination relating to the offence of terrorism compared to other predicate offences, is well organised

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Key findings

The low level of understanding of ML risks is also reflected in the very few cases investigated by the law enforcement agencies pertaining to ML and at times during the interviews with law enforcement agencies, it was clear that they did not fully appreciate the offence of ML. No prosecutions or confiscations have been done on the offence of ML.

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Key findings

In the absence of proper statistics and other data pertaining to TF cases and disruption actions taken coupled by the CFT regime in Uganda still being very young, the measures taken cannot be said to be commensurate with the huge risk of TF which exits in Uganda. The risk is also increased by Uganda's exposure to Somalia where one of the Terrorist Groups, Al’ Shabaab is based. Further, there are also internal groups existing in Uganda or with origins from Uganda like the Lord’s Resistance Army, whose terrorist activities are directed towards Uganda. Some of these groups, like the Lord’s Resistance Army have been designated internally in Uganda or by the UN Security Council as terrorist groups.

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Key findings

The functions of the FIA Board provided in the AMLA pose risk of interfering with the operational independence of the FIA.

Financial Institutions and DNFBPs in Uganda do not adequately apply AML/CFT preventive measures commensurate with their risks.

The AML/CFT supervisory regime in Uganda is not as strong as it should be due to there being no specific provisions in the AMLA explicitly providing for appointment of AML supervisors.

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Key findings

Supervision of remittance services carried out to mobile money service providers and agents is not adequately and effectively conducted.

The sanctions regime on AML/CFT under the AMLA does not provide for administrative sanctions. Although, criminal sanctions under the same Act appear to be dissuasive, proportionate and effective, the sanctions are still to be tested in the courts of law as there have been no prosecutions or convictions on ML yet. The administrative sanctions regime provided under the FI Act as read with the FI AML Regulations is not proportionate, dissuasive and effective.

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Key findings

The legal framework currently existing in Uganda does not provide for information on beneficial ownership to be obtained and retained by the competent authorities for purposes of ML.

Coordination and cooperation at national level is still poor in Uganda, particularly between law enforcement agencies and the DPP’s office.

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Priority Actions for Uganda to strengthen its AML/CFT System

Sections providing for CDD and STR reporting obligations in the FI Act and AMLA should be harmonised in order to address inconsistencies in CDD requirements and remove the dual reporting requirements.

Establish the FIA as the national centre for receipt, analysis and dissemination of financial intelligence and other information by amending the legal framework to ensure that all suspicious transaction reports are only reported to the FIA.;

The AMLA should be amended to provide for the full operational independence of the FIA. 19



AMLA should be amended to include provisions which designate supervisory authorities for AML/CFT purposes and confer on these authorities necessary powers to undertake their responsibilities and impose administrative sanctions against non-compliance;

Implement regulations to give effect to some of the provisions in the AMLA that require the promulgation of regulations to give them effect and conduct awareness raising and supervision activities among all regulated sectors to enhance understanding of their AML/CFT obligations and the risk of ML/TF inherent in their sectors

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Conduct a National Risk Assessment or where possible sectoral risk assessments to ensure that there is adequate understanding of ML/TF risks. Proper risk based approach should be implemented to manage the identified risks, to aid in the allocation of resources to high risk areas and enable proper informed AML/CFT guidance to be provided to both regulators and regulated entities;

Law enforcement, particularly police investigators, and DPP should be capacitated in terms of resources and training to deal with ML/TF cases and be able to conduct parallel financial investigations in every investigation that involves proceeds of crime or terrorism;

The FIA should be provided with access to all databases that are relevant to its work;

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Introduce a much more efficient system to manage and regulate the NPO sector, including strengthening the legal framework, adequately resourcing the NGO Board and AML/CFT awareness in the sector;

Resolve technical compliance issues relating to R.10, R11, R14-R16, R.19, R22 and R23 as a matter of priority in order to mitigate the risk posed by the inadequate legal framework;

Continue to roll out the National Identity Card project so as to assist and facilitate effective implementation of customer identification and verification obligations as required by Recommendation 10;

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Supervisors need to develop appropriate supervisory tools which will facilitate effective AML/CFT compliance monitoring for all reporting entities including mobile money service providers;

AML/CFT controls in the supervision of mobile money service providers need to be strengthened as quickly as possible;

Strengthen national cooperation and coordination of AML/CFT Competent Authorities, particularly between the police and the DPP’s Office; and

Introduce mechanisms of properly capturing statistics detailed enough to determine and understand Uganda’s role in international cooperation. 16-Sep-16 23


Esaamlg uganda-mutual-evaluation-report-ratings-findings

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