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After years of concerted effort and reforms, Uganda has finally been delisted from the European Union's list of high-risk third-country jurisdictions with strategic deficiencies in their anti-money laundering (AML) and countering the financing of terrorism (CFT) regimes.
The decision was communicated this week by the European Commission, marking a renewed era of confidence for international investors and a stronger fight against financial crime.
The European Commission, in a statement, confirmed that a number of third-country jurisdictions were delisted, including Uganda.
This followed a thorough technical assessment, based on specific criteria and a well-defined methodology, incorporating information collected through the Financial Action Task Force (FATF), bilateral dialogues, and on-site visits to the jurisdictions in question.
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The EU's decision aligns with the FATF's assessment, a global standard-setter for AML/CFT.
Seven other countries were removed from the list, namely, Barbados, Gibraltar, Jamaica, Panama, the Philippines, Senegal, and the United Arab Emirates.
In the same vein, new countries have been added to the black list, including neighbouring Kenya, Algeria, Angola, Côte d'Ivoire, Laos, Lebanon, Monaco, Namibia, Nepal and Venezuela.
A Long Road to Delisting
Uganda's journey towards delisting has been a protracted one, reflecting the complexities of implementing robust financial crime countermeasures.
The nation was initially added to the FATF's 'grey list' in February 2020. This decision, subsequently echoed by the EU, stemmed from deficiencies identified in Uganda's AML/CFT framework.
Key issues pointed out at the time included weaknesses in the legal and regulatory framework to combat money laundering and terrorist financing, inadequate supervision of financial institutions and designated non-financial businesses and professions, and insufficient investigations and prosecutions of money laundering cases.
The lack of a comprehensive national risk assessment and the limited capacity to freeze terrorist assets were also noted as critical areas needing improvement.
The grey-listing meant increased scrutiny and enhanced due diligence for financial transactions involving Uganda, which often led to delays and increased costs for businesses and individuals. It also had a chilling effect on foreign direct investment, as international financial institutions became more cautious about engaging with the Ugandan market.
Comprehensive Reforms and Political Will
In response to the FATF and EU's concerns, the Ugandan government embarked on an ambitious reform agenda.
Over the past few years, a series of legislative amendments have been enacted, including new changes to the Anti-Money Laundering Act.
These reforms aimed to address the identified deficiencies, strengthening the legal basis for combating financial crime.
Furthermore, regulatory bodies, such as the Financial Intelligence Authority (FIA) and the Bank of Uganda, have intensified their oversight of financial institutions, implementing stricter reporting requirements and enhancing their capacity to detect and deter illicit financial flows.
Beyond legislative and regulatory changes, there has been a notable increase in public awareness campaigns and training for relevant stakeholders, including law enforcement, prosecutors, and judiciary.
The government also demonstrated a heightened political will to combat financial crime, allocating more resources to relevant agencies and fostering greater inter-agency cooperation.
Looking Ahead: Rebuilding Trust and Economic Growth
Uganda's removal from the EU's high-risk list is expected to have a positive impact on its economy.
It will reduce the cost and complexity of international financial transactions, making it easier for Ugandan businesses to engage in global trade and attract foreign investment.
The enhanced credibility will also bolster Uganda's standing in the international financial community, potentially leading to increased access to international financing and partnerships.