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MEDIA BRIEFING ON UGANDA’S AML/CFT EFFORTS AND EXIT FROM THE FATF/ICRG REVIEW PROCESS

1.    PURPOSE OF THE MEDIA BRIEFING

a)    Inform the country about Uganda’s Exit from the Financial Action Task Force International Cooperation Review Group (FATF/ICRG) Review Process i.e. the FATF Grey List, and what it means for Uganda.

b)    To update the country on the progress made by Government to address strategic deficiencies in Uganda’s Anti-Money Laundering and Combating of Financing of Terrorism (AML/CFT) Regime, based on which Uganda has been removed from the FATF Grey List.

c)    To inform the Country on the next steps pertinent to ensuring continuous improvement to, and effectiveness of, Uganda’s AML/CFT Regime

2.    UGANDA’S EXIT FROM THE FATF/ICRG GREY LIST

2.1    The FATF Plenary Meeting held on Thursday 2nd November 2017 approved the International Cooperation Review Group (ICRG) Recommendation to remove Uganda from the FATF Compliance Document, which means that Uganda is now out of the ICRG Review Process and is therefore no longer on the FATF Grey List i.e. Uganda will no longer be subjected to the FATF’s on-going Global AML/CFT compliance process. This implies that Uganda’s financial system is now Robust enough to adequately identify and address all Money Laundering and Financing of Terrorism Risks, which now eases correspondent banking and other investment and financial flows with the rest of the world.

2.2    The FATF congratulated Uganda for the significant progress made in addressing the strategic deficiencies earlier identified by FATF, as per the Action Plan for Uganda, the specific elements of which I will highlight shortly in this Brief. The FATF thus encouraged Uganda to continue working with the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to sustain improvements in, and effectiveness of, Uganda’s AML/CFT Regime.

3.    PROGRESS MADE BY UGANDA TO ADDRESS STRATEGIC DEFICIENCIES IDENTIFIED IN THE FATF ACTION PLAN FOR UGANDA

3.1    In 2013, the Anti-Money Laundering Act, 2013 was enacted and its implementation immediately began. To that end, the Financial Intelligence Authority (FIA) was established in 2014 in accordance with the Act, and is now fully operational and functional.

3.2    In February, 2014, I wrote to the President of the Financial Action Task Force (FATF), to convey Government’s pledge of high level political commitment to work with the FATF, and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), to address strategic deficiencies in Uganda’s Anti-Money Laundering and Combating of Financing of Terrorism (AML/CFT) regime.
 
3.3    As a result of Government’s commitment to work with FATF, Uganda was officially placed under FATF’s International Cooperation Review Group (ICRG) Review process and the FATF accordingly endorsed an Action Plan for Uganda in 2014. Since then, every six months, Uganda has been reporting to the FATF through the Africa/Middle East Regional Review Group (A/ME RRG) of the ICRG, on progress made in addressing her AML/CFT deficiencies as required by ICRG procedures, and in line with the FATF Action Plan for Uganda, which was further revised/updated in June 2016.

3.4    Uganda being placed under the FATF ICRG Review process (FATF Grey List) implied that, under the FATF Standards, every FATF member country was required to exercise caution and take appropriate steps to protect against financial transactions originating from or destined for Uganda, due to Uganda having inadequate AML/CFT measures. All countries are required to periodically update the FATF Secretariat on the steps they have taken in that regard. Therefore, being on the FATF Grey list amounted to an indictment on Uganda’s financial system and was therefore a major constraint to correspondent banking; Foreign Direct Investment; and other financial flows to and from Uganda, and thus presented a significant risk to our quest to accelerate economic growth and development outcomes.  

3.5    The remedial measures, as per the FATF Action Plan for Uganda, on which Uganda has been reporting to the ICRG of FATF are:

i.    Adequately criminalizing terrorist financing;
ii.    Establishing and implementing an adequate legal framework for identifying, tracing and freezing terrorist assets;
iii.    Ensuring effective record keeping requirements;
iv.    Establishing a fully operational and effectively functioning Financial Intelligence Unit;
v.    Ensuring adequate suspicious transactions reporting requirements;
vi.    Ensuring adequate and effective AML/CFT supervisory and oversight program for all financial sector; and
vii.    Ensuring appropriate laws and procedures are in place with regard to international cooperation for the FIU and supervisory authorities.

3.6    The key measures undertaken by Uganda to address the above deficiencies include the following:

a)    Uganda has signed and ratified all the relevant UN Conventions that have a bearing on ML/TF control and has established for implementing the applicable UN Security Council Resolutions.

b)    The Anti-Money Laundering (Amendment) Act, 2017 was passed to address deficiencies in the principal Act. As a result, standards for record keeping requirements for all financial institutions have been enhanced; clarity on AML/CFT supervision and enforcement of compliance has been provided for; and there is streamlined legal basis and procedures for competent authorities to provide a wide range of mutual legal assistance as well as international co-operation for the FIA and supervisory authorities among others.

c)        Anti-Terrorism Act, 2002 has been amended. The Anti-Terrorism (Amendment) Act, 2015 criminalizes the financing of terrorism in accordance with the Terrorist Financing (TF) Convention. In addition, further amendments have been undertaken under the Anti-Terrorism (Amendment) Act, 2017. The latest amendment criminalizes any act, whether occurring in Uganda or elsewhere in accordance with the provisions of the International Convention for the suppression of the financing of terrorism (1999). The Anti-Terrorism Regulations, 2015 were issued to implement the provisions of the amended Act. In addition, Anti-Terrorism Regulations, 2016 were issued to provide for the implementation of the UN Security Council Resolutions.

d)    Other key legislations that have been amended are:

i.    Financial Institutions (Amendment) Act, 2016 provided for the streamlining of the inconsistencies in Customer Due Diligence (CDD) requirements and Suspicious Transactions (STR) reporting obligations. As a result, FIA is the sole and central agency designated to receive STRs.
ii.    Capital Markets Authority (Amendment) Act, 2016 provides the CMA supervisory powers for AML/CFT purposes and the ability to impose administrative sanctions for non-compliance.
iii.    Insurance Regulatory Authority (Amendment) Act, 2017 also provides the IRA supervisory powers for AML/CFT purposes and the ability to impose administrative sanctions for non-compliance.
iv.    The Narcotic Drugs and Psychotropic Substances (Control) Act, 2016 was enacted to consolidate the law relating to narcotic drugs and psychotropic substances and to implement the provisions of the International Conventions on narcotic drugs and psychotropic substances.
v.    The Tier 4 Microfinance Institutions and Money Lenders Act, 2016 was enacted to provide a framework for the regulation of the Microfinance sub-sector and the licensing of money lenders.

e)    The FIA, in collaboration with relevant MDAs, Private Sector, and Development Partners, conducted a Money Laundering/Financing of Terrorism (ML/FT) National Risk Assessment (NRA), which is going to pave way for the application of the risk-based approach to AML/CFT supervision. The NRA provides recommendations and an Action Plan which identifies and assigns specific responsibilities to particular public and private entities with respect to AML/CFT. The NRA was discussed and approved by Cabinet in August 2017.

f)      The Minister of Finance, Planning and Economic Development has established a AML/CFT National Task Force whose responsibility is to promote coordination and cooperation amongst all stakeholders in the development and implementation of strategies and policies, and to ensure that all the relevant sectors appropriately address the risks identified in the NRA.

3.7    In June 2017, the FATF Plenary meeting held in Valencia, Spain, observed that Uganda had made significant progress to address the strategic deficiencies in its AML/CFT Regime and thus authorized the ICRG to conduct an onsite visit to Uganda, to confirm the effectiveness of Uganda’s AML/CFT Regime and the sustainable implementation of the same. To that end, the ICRG Africa/Middle East Co-chairs conducted the on-site visit to Uganda on 18th -19th September 2017 and their report to the FATF/ICRG was to the effect that Uganda’s commitment to advance and to continue the implementation of its AML/CFT reforms is clear, ongoing, and robust, and that and that implementation was underway. To that end, the A/ME Co-chairs recommended that it was no longer necessary to keep Uganda under the FATF ICRG Review process.

4.    THE NEXT STEPS

a)    Uganda will continue cooperating with the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to ensure sustainable improvements and robustness of Uganda’s AML/CFT Regime.

b)    Government will prioritise actions pertinent to strengthening the Financial Intelligence Authority to effectively perform its mandate.

c)    As per the Cabinet Directive, all Government Ministries, Departments, and Agencies are required to prioritise implementation of the NRA recommendations and Action Plan within their sector plans and budgets.