THE EFFECTIVENESS OF LEGAL REGIME ON MONEY LAUNDERING IN UGANDA

Table of Contents

DECLARATION ............................................................................................................................ i

APPROVAL .................................................................................................................................. ii

DEDICATION .............................................................................................................................. iii

AKNOWLEDGEMENT .............................................................................................................. iv

LIST OF ACTS ............................................................................................................................. v

LIST OF CASES .......................................................................................................................... vi

LIST OF ABBREVIATIONS .................................................................................................... vii

ABSTRACT ................................................................................................................................. xii

CHAPTER ONE ........................................................................................................................... I

1.1 INTRODUCTION ................................................................................................................... I

1.2 STATEMENT OF THE PROBLEM .................................................................................... 4

1.3 OBJECTIVE OF THE STUDY ............................................................................................. 5

1.4 RESEARCH QUESTIONS .................................................................................................... 5

1.5 HYPOTHESIS ......................................................................................................................... 6

1.6 SCOPE OF THE STUDY ....................................................................................................... 6

1.7 LITERATURE REVIEW ...................................................................................................... 6

1.8 RESEARCH METHODOLOGY ........................................................................................ 10

1.9 SIGNIFICANCE OF THE STUDY .................................................................................... II

1.10 CHAPERISATION ............................................................................................................. II

1.11 CONCLUSION ................................................................................................................... 12

CHAPTER TWO ........................................................................................................................ 13

NATURE AND SCOPE, TECHNIQUES AND CONSEQUENCES OF MONEY

LAUNDERING IN UGANDA ................................................................................................... 13

2.0 INTRODUCTION ................................................................................................................. 13

2.1 NATURE AND SCOPE OF MONEY LAUNDERING .................................................... 13

2.1.1 Money laundering cycle ................................................................................................... 17

2.2 TECHNIQUES OF MONEY LAUNDERING ................................................................... 20

2.2.1 Cash smuggling .................................................................................................................. 20

2.2.2 Black salaries ...................................................................................................................... 20

2.2.3 Offshore accounts (shell banks) ........................................................................................ 20

2.2.4 Shell Company ................................................................................................................... 20

2.2.5 Underground banking ....................................................................................................... 21

2.2.5 Hawala and Alternative Remittance Systems ................................................................. 21

2.2.6The Originator of the Transfer .......................................................................................... 22

2.2. 7 Structuring .......................................................................................................................... 23

2.2,8 Round-tripping ................................................................................................................... 23

2.2.9 Bank capture ...................................................................................................................... 23

2.2.10 Cash intensive businesses ................................................................................................ 23

2.2.11 Use of third parties ........................................................................................................... 24

2.2.12 Purchase of real estate to facilitate other criminal activity .......................................... 24

2.2.13 Manipulation of property values .................................................................................... 24

2.2.0 Pt·edicate offences ............................................................................................................... 24

2.2.0 Background of money laundering predicate offences .................................................... 24

2.2.0.1 Intt·oduction ..................................................................................................................... 24

2.2.0.2 Predicate offences of Money Laundering ..................................................................... 25

2.2.1 Money laundering can be detected in the following ways, namely ................................ 30

2.3 CONSEQUENSES OF MONEY LAUNDERING IN UGANDA ..................................... 31

2.2,1 Money laundering undermines international efforts to establish free and competitive markets and hampers the development of national economies ............. 31

CHAPTER THREE .................................................................................................................... 34

3.0 THE OFFENCES OF MONEY LAUNDERING AND STRATEGIES I .. MEASURES

TO COMBAT MONEY LAUNDERING AS PER THE ANTI-MONEY LAUNDERING

ACT AND OTHER ACTS REGULATIONS AND POLICIES. 34

3.1 INTRODUCTION ................................................................................................................. 34

3.2 THE OFFENCES OF MONEY LAUNDERING ............................................................... 35

3.3 STRATEGIES AND MEASURES TO COMBAT MONEY LAUNDERING IN UGANDA ............................................... . 38

3.3.1 Making money laundering a crime .................................................................................. 39

3.3.2 Also the banks should monitor the flow of money .......................................................... 39

3.3.3 Accountable persons are charged with undertaking the measures aiming at combating money laundering ............................................ 39

3.3.4 Account/s should be maintained in the true names of account holder .......................... 40

3.3.5 Client due diligence measure ............................................................................................ 40 ·

3.3.6 Clients who are Politically Exposed persons (PEPs) ...................................................... 42

3.3.7 Records should be maintained for 10 years ..................................................................... 42

3.3.7 Attention to complex, unusual and large transactions ................................................... 43

3.3.8 Refraining from doing the business with money launderers ......................................... 43

3.3.9 Reporting suspicious transactions .................................................................................... 44

3.3.10 Financial intelligence authority as the strategy to fight money laundering ............... 44

CHAPTER FOUR .. ...................................... .................................. ......... ..... .. .............. ............... 51

EFFECTIVENESS OF THE ANTI-MONEY LAUNDERING ACT AND THE CAPACITY OF THE FINANCIAL INTELLIGENCE AUNTHORITY TO FIGHT AND COMBAT MONEY LAUNDERING ........ 51

4.0 INTRODUCTION ................................................................................................................. 51

4.1 EFFECTIVENESS OF ANTI-MONEY LAUNDERING ACT OF 2013 ........................ 51

4.2 CAPACITY OF FINANCIAL INTELLIGENCE AUNTHORITY (FIA) ...................... 54

CHAPTER FIVE ........................................................................................................................ 58

CHALLENGES THAT AFFECT THE LEGAL REGIME IN CURBING MONEY

LAUNDERING AND THE POSSIBLE RECCOMENDATIONS ........................................ 58

5.0 INTRODUCTION ................................................................................................................. 58

5.1 CHALLENGES ..................................................................................................................... 58

5.1.1 Poorly resourced in terms of manpower .......................................................................... 58

5.1.2 Institutions are financially handcuffed to fight with money laundering ...................... 58

5.2.3 Most Ugandan Anti-Money laundering Laws are not yet implemented being still new, institutions are still digesting the laws have not yet reduced them in their manuals ........... 59

5.2.4 Inadequate of public awareness ........................................................................................ 59

5.2.5 Insufficient evidence to incriminate criminals ................................................................ 59

5.2.6 Lack of equipped system to track the suspicion transactions ........................................ 60

5.2. 7 No policy/law that deals with confiscating of proceeds of crime ................................... 60

5.2.8 Powers invested is not fully exercised .............................................................................. 61

5.2.9 The Laxity within the banking sector to comply with the Anti-Money Laundering Law is one major loophole ...................... 61

5.2.10 No law that regulates real estate, lawyers and other people that provides aid to the criminals to infiltrated the system .................. 61

5.2.11 Also foreign countries is still a major threat to Uganda for money laundering ........ 62

5.2.12 Large informal sector hinders the effective implementation of Anti -Money Laundering Laws ...................................................... 62

5.2.13 Mobile money business is the new challenge ................................................................. 62

5.2 POSSIBLE RECOMMENDATIONS ................................................................................. 63

GENERAL CONCLUSION ....................................................................................................... 67

BIBILOLOGRAPHY ................................................................................................................. 69 

ABSTRACT. 

The study critically appraises the legal and institutional frame work of combating money laundering in Uganda in relation to the Anti- Money Laundering demands with the view of assessing the challenges, lacunas, hindrances and mile stones faced by the legal and institutional structure. The major objective of this research is to evaluate the effectiveness and adequacy of the various laws and capacity of the various institutions in Uganda to meet the regional and international mandates to fight money laundering in regards to regional and international demands. The study attempts to address four major Questions. And these are; First: Whether the presence of a comprehensive law on anti-Money laundering provides for its legal and institutional frame work to adequately combat Money laundering. Second: Whether, though attempted to be addressed, Money laundering m Uganda can be effectively addressed in all Institutions. Three: Whether Money laundering m Uganda can be addressed on both a regional and international mandate demand. Lastly: Whether the massive Public ignorance on Money laundering and inadequate awareness stimulates Money laundering in Uganda. The study gives the background and financial mishap caused by money laundering in Uganda, attached with proceeds of laundered money. The research equally examines the scope of money laundering from a domestic, regional and international arena and outlines the consequences of money laundering to the legal regime. The study critically asses the strength of the law, capacity of the institutions and the adequacy of man power, political will and enforcement policies to curb money laundering in Uganda. In conclusion, the study outlines the challenges that affects the legal regime to combat money laundering and possible recommendations on the various ways of tackling money laundering scourge and in addition. what lacks in the law and the possible ways forward.