{UAH} Fwd: A must read: Western Powers Warn Uganda On Terror Financing
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Date: 6 Jul 2017
Subject: A must read: Western Powers Warn Uganda On Terror Financing
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Western Powers Warn Uganda On Terror Financing
By Our Reporters
In a phone interview, Uganda's Finance Intelligence Authority (FIA) Executive Sydney Asibo downplayed fears that our country was economically in trouble after being indicted during the world economic meeting in Valencia, Spain last weekend.
Under the auspices of the Financial Action Task Force (FATF), an initiative of the G7 league of the 7 wealthiest nations, representatives of movers and shakers of the world economy met in Spain to reflect on the efficacy of the institutional and legislative steps FATF member countries have taken to combat money laundering and terrorism financing.
Whereas countries like Afhaghanstan were praised for rapidly complying with globally-acceptable standards as set and determined by FATF, a list of seven economies including Uganda were identified and blamed for not having done enough to become sufficiently compliant. Failure to comply with FATF requirements prompts the secretariat to categorize the country into "the grey list of countries," a very unenviable characterization only better than "the Red List of countries." In the Red List is Iran and North Korea.
A country in the Red list would struggle to even have its instruments like payment cheques to have universal recognition or acceptability in the international finance system. The Ugandan team at Valencia was led by Finance Ministry's Patrick Ocailap with other members being Asibo and Bank of Uganda's Director Justine Bagyenda.
The trio successfully pleaded our case and Uganda was deleted from the grey list and given up to September 2017 to fully comply or risk being placed on the red list along with bad boys Iran and North Korea largely dismissed by the international system as pariah states.
According to Ocailap, failure to get favourable categorization by FATF would hurt Uganda's international competitiveness as an economy as well as slow down its chances of attaining the middle income status by 2020. It would make the international business community to perceive the Ugandan economy as one that isn't fraud and crime-free.
To sustainably improve our ratings in a manner FATF wants, Uganda must strengthen collaborations between concerned institutions like the legislature, Sydney Asibo's Intelligence Authority, Bank of Uganda and others, according to Ocailap.
In rating Uganda leniently during the Valencia meeting, Asibo said the FATF members considered the latest amendments the Rebecca Kadaga-led legislature made earlier this year on the Anti-Money Laundering Act specifically addressing concerns FATF had been raising in the preceding months. Our Anti-Terrorism Act (as Amended) was also considered and found compliant enough by experts the members at the meeting.
There was concern at Valencia that since 2005, the World Bank has been involved in helping Uganda build institutional capacity to comply with FATF requirements but not enough progress was being made.
Since 2005, WB has been assessing our institutional and legislative capabilities as manifested in our Anti-Money Laundering regulatory framework and routinely making recommendations which the Museveni government has been slow taking on board, hence the world anger directed at Uganda during the FATF gathering in Valencia Spain.
All said and done, Asibo maintains that Uganda will no doubt use between now and September to grow to the required levels of compliance to avoid the wrath of FATF peers at the next meeting. He says with a fully fledged Authority in place, Uganda will no doubt make a lot of progress implementing the provisions of the Anti-Money Laundering Act.
FINANCE MINISTRY SPEAKS OUT
Asibo's assurances were further buttressed by the Finance Ministry Publicist Jim Mugunga in the following statement sent to us in response to our queries about Uganda's non compliance with FATF requirements:
VERBATTIM
UGANDA TO EXIT FINANCIAL GREY LIST: Uganda is destined to be removed from the Financial Action Task Force (FATF) grey list following commendable progress posted to reverse key deficiencies in various finance related laws including Anti-money laundering and the fight against terrorism financing. The implication is that Uganda will not advance to the Red list where countries are blacklisted and cannot conduct financial transactions with other global financial institutions including commercial and foreign counterparts. The development follows robust presentations of national improvements on the laws; regulatory frameworks and improved financial monitoring systems by the Uganda delegation attending the TAFT meetings in Valencia Spain. During the plenary session held Thursday June 22, TUFT commended the Government of Uganda for its accomplishments which comply with the global organization's recommendations contained in the revised FATF Targeted Review Action Plan for Uganda. The FATF Plenary also noted the strong Political Commitment and the enduring efforts of Uganda Government Technical Officials, which have resulted in the expeditious handling of the required reforms. Patrick Ocailap the Deputy Secretary to the Treasury who is also the leader of Uganda's delegation, noted despite this milestone achievement the country is committed to further improve country financial systems and to ensure that they are free of exposure to money laundering; terrorism financing and financial crimes. "As we push forward to attaining modern and industrialized status as a country; we are obliged to avoid complacency and vulnerability but ensure that a clean; fraud and crime free financial regime prevails in Uganda. We so far proved our commitment and have strong collaboration and support from key government institutions," he said. Ocailap revealed that there has been multi-sectoral effort to reverse this negative country grading. He applauded maximum support from the Parliament of Uganda; Cabinet Secretariat/Office of the President, Bank of Uganda, the Financial Intelligence Authority, the Ministry of Justice and Constitutional Affairs, Ministry of Internal Affairs, Capital Markets Authority, the Insurance Industry and indeed the Ministry of Finance, Planning and Economic Development (MoFPED). "The FATF Plenary has commended our efforts; improvements and endorsed recommendations for an on-site inspection visit to Uganda which is scheduled for September this year. Their visit is intended to ascertain and confirm that our broad improved systems and financial processes function effectively and seamlessly. The next steps, therefore, include immediate efforts to bring all stakeholders in Uganda on board, with a view to ensuring that all entities, in the public and private sector, adhere to the requirements of the new AML/CFT Regime. The Ministry of Finance will continue to provide leadership and coordination in this effort and I am confident that we shall make the grade," he added. The other officials on Uganda's delegation are: Mrs. Justine Byagenda, Executive Director Bank Supervision, Bank of Uganda; Mr. Sydney Asubo, Executive Director, Financial Intelligence Authority; Mr. Titus Mulindwa, Bank of Uganda; Mr Paul Okirig, Ministry of Justice and Constitutional Affairs; and Mr. John Byaruhanga, Ministry of Finance, Planning and Economic Development.
M7'S UGANDA BASHED:
At the just concluded FATF session in Valencia in Spain (on Thursday 22nd June 2017), on the FATF website was posted the following media statement showing displeasure about a number of countries whose leaders have been lukewarm in efforts aimed at stamping out money laundering and countering terrorism financing.
On the FATF website (www.fatf.gafi.org), the information about Uganda is under the link entitled: High-risk and non-cooperative jurisdictions. The FATF secretariat displeasure about Uganda and other pariah states like Iran and North Korea (Finance Intelligence Authority ED Sydney Asibo says the latter two countries are the least compliant on the FATF checklist) is contained in the following media statement listing Uganda along with a few other worse off countries:
VERBATTIM: Improving Global AML/CFT Compliance: On-going Process – 23 June 2017–Valencia, Spain, 23 June 2017 – As part of its on-going review of compliance with the AML/CFT standards, the FATF identifies the following jurisdictions that have strategic AML/CFT deficiencies for which they have developed an action plan with the FATF. While the situations differ among each jurisdiction, each jurisdiction has provided a written high-level political commitment to address the identified deficiencies. The FATF welcomes these commitments. A number of jurisdictions have not yet been reviewed by the FATF. The FATF continues to identify additional jurisdictions, on an on-going basis, that pose a risk to the international financial system. The FATF and the FATF-style regional bodies (FSRBs) will continue to work with the jurisdictions noted below and to report on the progress made in addressing the identified deficiencies. The FATF calls on these jurisdictions to complete the implementation of action plans expeditiously and within the proposed timeframes. The FATF will closely monitor the implementation of these action plans and encourages its members to consider the information presented below:
M7'S UGANDA LISTED:
Bosnia and Herzegovina: In June 2015, Bosnia and Herzegovina made a high-level political commitment to work with the FATF and MONEYVAL to address its strategic AML/CFT deficiencies. Since February 2017, Bosnia and Herzegovina adopted several laws, including amendments to the criminal codes and amendments to financial sector laws. The FATF will need to review the final versions of these laws to determine the extent to which they address certain deficiencies, including: (1) harmonizing criminalization of terrorist financing and money laundering in the remaining criminal code; (2) establishing adequate procedures for the confiscation of assets; and (3) establishing an adequate supervisory framework. Bosnia and Herzegovina will also need to continue progress in implementing adequate and appropriate measures for the non-profit sector and cross-border currency controls. The FATF encourages Bosnia and Herzegovina to continue implementing its action plan to address its AML/CFT deficiencies.
Ethiopia: In February 2017, Ethiopia made a high-level political commitment to work with the FATF and ESAAMLG to strengthen its effectiveness and address any related technical deficiencies. Ethiopia has begun working to implement its action plan, which includes: (1) implementing the results of its national risk assessment; (2) fully integrating designated non-financial businesses and professions into its AML/CFT regime; (3) ensuring that the proceeds and instrumentalities of crime are confiscated; (4) consistently implementing terrorism-related targeted financial sanctions and proportionately regulating non-profit organizations in line with a risk-based approach; and (5) establishing and implementing WMD-related targeted financial sanctions. The FATF encourages Ethiopia to continue implementing its action plan to address its AML/CFT deficiencies.
Iraq: In October 2013, Iraq made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies. Since February 2017, Iraq has taken steps towards improving its AML/CFT regime. Iraq should continue to implement its action plan to address its remaining deficiencies, including by: (1) continuing to implement its legal framework and related procedures for identifying and freezing terrorist assets; (2) ensuring that all financial institutions are subject to adequate customer due diligence requirements; (3) ensuring that all financial institutions are subject to adequate suspicious transaction reporting requirements; and (4) establishing and implementing an adequate AML/CFT supervisory and oversight programme for all financial institutions. The FATF encourages Iraq to continue implementing its action plan to address its remaining AML/CFT deficiencies.
Syria: Since February 2010, when Syria made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies, Syria has made progress to improve its AML/CFT regime. In June 2014, the FATF determined that Syria had substantially addressed its action plan at a technical level, including by criminalizing terrorist financing and establishing procedures for freezing terrorist assets. While the FATF determined that Syria has completed its action plan agreed upon with the FATF, due to the security situation, the FATF has been unable to conduct an on-site visit to assess whether the process of implementing the required reforms and actions is underway. The FATF will continue to monitor the situation, and will conduct an on-site visit at the earliest possible date.
Uganda: Since February 2014, when Uganda made a high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies, Uganda has substantially addressed its action plan at a technical level, including by: (1) adequately criminalising terrorist financing; (2) establishing adequate procedures for freezing terrorist assets in accordance with UNSCRs 1267 and 1373, and their successor resolutions; (3) ensuring that all financial institutions are subject to adequate record-keeping requirements; (4) establishing a fully operational and effectively functioning financial intelligence unit; (5) introducing an appropriate legal basis to permit the competent authorities to provide a wide range of mutual legal assistance; and (6) ensuring that appropriate laws and procedures are in place with regard to international co-operation for the financial intelligence unit and supervisory authorities. The FATF will conduct an on-site visit to confirm that the process of implementing the required reforms and actions is underway to address deficiencies previously identified by the FATF.
Vanuatu: In February 2016, Vanuatu made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since February 2017, Vanuatu has taken steps towards improving its AML/CFT regime, including by the passage and entry into force of 12 amendment acts and introducing one new act related to targeted financial sanctions. The FATF will need to review the final versions of these laws. Vanuatu should continue to work on implementing its action plan to address its deficiencies, including by: (1) assessing and responding to offshore terrorist financing risks; (2) adequately criminalising money laundering and terrorist financing; (3) establishing and implementing adequate procedures for the confiscation of assets related to money laundering; (4) establishing and implementing an adequate legal framework for identifying, tracing and freezing terrorist assets and other UNSCR sanctions; (5) ensuring a fully operational and effectively functioning financial intelligence unit; (6) strengthening preventive measures, including for wire transfers; (7) establishing transparency for the financial sector, and for legal persons and arrangements; (8) implementing an risk-based AML/CFT supervisory and oversight programme for all the financial sector and trust and company service providers; and (9) establishing appropriate channels for international co-operation and domestic coordination policies and actions on identified risks and ensuring effective implementation. The FATF encourages Vanuatu to continue implementing its action plan to address its AML/CFT deficiencies.
Yemen: Since February 2010, when Yemen made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies, Yemen has made progress to improve its AML/CFT regime. In June 2014, the FATF determined that Yemen had substantially addressed its action plan at a technical level, including by adequately criminalizing money laundering and terrorist financing; establishing procedures to identify and freeze terrorist assets; improving its customer due diligence and suspicious transaction reporting requirements; issuing guidance; developing the monitoring and supervisory capacity of the financial sector supervisory authorities and the financial intelligence unit; and establishing a fully operational and effectively functioning FIU. While the FATF determined that Yemen has completed its action plan agreed upon with the FATF, due to the security situation, the FATF has been unable to conduct an on-site visit to assess whether the process of implementing the required reforms and actions is underway. The FATF will continue to monitor the situation, and conduct an on-site visit at the earliest possible date.
AFGHANISTAN SHOCKS
Shockingly in the same statement, Afghanistan is praised for registering rapid improvement to meet FATF compliance requirements. The following is what the secretariat writes about Afghanistan and Lao PDR in comparison to worse off countries like Uganda: "Jurisdictions No Longer Subject to the FATF's On-Going Global AML/CFT Compliance Process. Afghanistan: The FATF welcomes Afghanistan's significant progress in improving its AML/CFT regime and notes that Afghanistan has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in June 2012. Afghanistan is therefore no longer subject to the FATF's monitoring process under its on-going global AML/CFT compliance process. Afghanistan will work with APG as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report, in particular, fully implementing the cross-border regulations at its official land border crossing points. Lao PDR: The FATF welcomes Lao PDR's significant progress in improving its AML/CFT regime and notes that Lao PDR has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in January 2015. Lao PDR is therefore no longer subject to the FATF's monitoring process under its on-going global AML/CFT compliance process. Lao PDR will work with APG as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report."
WHAT MAKES FATF POWERFUL
With exception of Israel and Saudi Arabia, which have mere observer status, all UN countries are Financial Action Task Force (FATF) members and being blacklisted makes the world shrink around Museveni. FATF is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. The FATF is therefore a "policy-making body" which works to generate the necessary political willingness to bring about national legislative and regulatory reforms in these areas. The FATF has developed a series of Recommendations that are recognised as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction. They form the basis for a co-ordinated response to these threats to the integrity of the financial system and help ensure a level playing field. First issued in 1990, the FATF Recommendations were revised in 1996, 2001, 2003 and most recently in 2012 to ensure that they remain up to date and relevant and they are intended to be of universal application. FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally. In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse. The FATF's decision making body, the FATF Plenary, meets three times per year. To ensure soft power is used to ensure compliance to its standards, FATF has since admitted the following economically very influential iinternational organisations to have observer status: African Development Bank, Anti-Money Laundering Liaison Committee of the Franc Zone (CLAB), Asian Development Bank, Basel Committee on Banking Supervision (BCBS), Egmont Group of Financial Intelligence Units, European Bank for Reconstruction and Development (EBRD). These international organisations are specifically concerned about the success of anti-money laundering efforts globally. This is good for the integrity of the international finance system. The Financial Action Task Force (FATF) was established in July 1989 by a Group of Seven (G-7) Summit in Paris, initially to examine and develop measures to combat money laundering. FATF was created under the Economic Declaration from the 1989 G7 Summit in Paris France. In October 2001, the FATF expanded its mandate to incorporate efforts to combat terrorist financing, in addition to money laundering. Since its inception, the FATF has operated under a fixed life-span, requiring a specific decision by its Ministers to continue. The current mandate of the FATF (2012-2020) was adopted at a Ministerial meeting in April 2012. The FATF objectives include setting standards and promoting effective implementation of legal, regulatory and operational measures for combating money laundering, terrorism financing and other related threats to the integrity of the international financial system. Starting with its own members, the FATF monitors countries' progress in implementing the FATF recommendations; reviews money laundering and terrorist financing techniques and counter-measures and promotes the adoption and implementation of the FATF recommendations globally.
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