Experts Urge: Uganda Must Press On with Anti-Money Laundering Reforms

Estimates suggest that trade-based money laundering costs Uganda more than $6.6 billion each year.

Kampala, Uganda | JULIUS BUSINGE | Financial specialists are urging ongoing cooperation between Uganda’s government and business sector to reinforce the nation's anti-money laundering (AML) regulations after it was recently taken off the Financial Action Task Force (FATF) Grey List.

The warning comes amid concerns that failure to maintain vigilance could reverse economic gains and deter foreign investment.

Uganda was grey-listed by the FATF from February 2020 to February 2024 due to deficiencies in its Anti-Money Laundering (AML), Counter-Terrorism Financing (CTF), and Counter-Proliferation Financing (CPF) frameworks.

The nation's removal from the list in February of this year was a notable achievement, however, specialists warn that becoming too relaxed might result in backsliding.

Aligning itself with worldwide Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) standards has opened up substantial avenues for economic expansion in the country by enhancing accessibility to trade and investments. Its previously unacknowledged strong and adaptable financial sector is now seen as safeguarding systemic integrity and protecting the welfare of average citizens via increased stability. This adherence to regulations has also improved international collaboration by lessening transactional oversight from correspondent banks, leading to more seamless financial processes and reinforcing Uganda’s standing in the global market.

At the inaugural Anti-Money Laundering and Financial Crime Public-Private Sector Dialogue held in Kampala on March 26, Wilbrod Owor, who serves as the executive director of the Uganda Bankers Association (UBA), cautioned that money laundering represents a significant risk to Uganda’s economic goals.

Owor stated that the government’s strategy for tenfold economic expansion hinges on areas such as agricultural industrialization, tourism, and mining—sectors that necessitate foreign capital. However, he pointed out that money laundering deters genuine investors, escalates regulatory expenses, and raises the cost of international transactions. Should we revert to being part of the Grey List, our economic advancements would be compromised.

BoU re-echoes concerns

Bank of Uganda Governor Michael Atingi-Ego rechoed these concerns, stressing that financial integrity is critical for stability and global credibility. "Money laundering and terrorist financing undermine the rule of law and public trust," he said. "With Uganda's domestic savings insufficient to fund major projects, we must attract external investment--and that demands a secure financial system."

He pointed out recent changes like updates to anti-money laundering regulations, yearly risk evaluations, and enhanced oversight, yet stressed the importance of taking additional steps, which include setting up registries for beneficial owners and strengthening collaboration between different agencies.

The economic toll of grey-listing was severe. Foreign Direct Investment (FDI) dropped by 16% in 2020, according to Bank of Uganda data, while financial institutions faced higher compliance costs and restricted access to international banking networks.

Godfrey Sebaana, the chief executive officer of Diamond Trust Bank (DTB), noted that Ugandan businesses bore the brunt of the grey-listing, with increased scrutiny from foreign banks and higher operational expenses.

Leaving the Grey List is a significant accomplishment, yet we can’t afford to become complacent," he stated. "It’s crucial that we keep investing in compliance technologies, enhancing supervision, and promoting cooperation between the public and private sectors to avoid backsliding.

Financial offenses versus digital dangers

Jusu-Sheriff, the founder of Africa Risk Management and Compliance Partners, connected money laundering with an increase in cybercrime threats, advising companies to implement more robust cybersecurity strategies.

"Financial crimes and cyber threats go hand in hand," he said. "Better digital hygiene--such as secure passwords and updated anti-virus software--can help curb these risks," Sheriff said.

Reports estimate that trade-based money laundering costs Uganda over $6.6 billion annually, with gold and petroleum sectors being major targets. To safeguard the economy, experts recommend ongoing regulatory reforms, enhanced monitoring, and sustained cooperation between government and industry players.

As Uganda moves forward, the message is clear: maintaining financial integrity is not just a regulatory obligation--it is a necessity for long-term growth and global competitiveness.

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