Uganda continues to lose at least US$1b (over sh3.69 trillion) in revenue each year to Illicit Financial Flows (IFF), corruption and money laundering activities, the Global Financial Integrity (GFI) report 2018 indicates Angry residents camping outside the office of Royal Finacial Service Ltd, one of the financial institutions in Masaka. Photo by Davis Buyondo
Six years after being established to monitor, investigate, and prevent money laundering, financing of terrorism in Uganda and related activities, Uganda Financial Intelligence Authority (UFIA), is struggling to fully execute its mandate.
As a result, Uganda continues to lose at least US$1b (over sh3.69 trillion) in revenue each year to Illicit Financial Flows (IFF), corruption and money laundering activities, the Global Financial Integrity (GFI) report 2018 indicates.
GFI, a Washington based Non-Profit Research Organisation, describes IFFs as funds that are illegally earned, transferred, and/or utilised across an international border or simply as the illegal movements of money or capital from one country to another.
Ugandan economists and government authorities attribute the loss to UFIAs poor performance due to lack of specialised financial expertise, lack of enough resources and poor coordination among justice departments such as police, courts and other relevant entities.
Although Uganda was removed from the Financial Action Task Force (FATF) Anti Money Laundering (AML) Deficient list in 2017, after the country established the legal and regulatory frameworks, money laundering remains a problem in the country, according to Cortis Paul Lakuma, a Researcher at Economic Policy Research Centre (EPRC).
Lakuma contributed to the GFI 2018 report, which states the institutional framework to regulate money laundering is still not robust enough to address cash smuggling and triangulated transactions.
“I cannot judge them (UFIA) so harshly because they are not well resourced. They have done what they can within the limited resources given to them,” said Lakuma.
He explained that the US$1b loss is bigger than the country’s (2018/2019) agriculture and health budgets combined. The health budget is sh2.6 trillion and agriculture sh1 trillion. Still, the loss is bigger than the education budget, which is sh3.28 trillion.
“If all the USD1Bn was to be trapped back into Uganda’s economy, there would be effective service delivery across all sectors,” he added.
Lakuma explained that the net benefits of IFFs contribute to criminal acts such as poaching, human trafficking, mis-invoicing and the like.IFFs and money laundering result in a loss of what are often desperately needed resources to fund public initiatives or critical investments states […]