FATF Status

Uganda is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies.

Latest FATF Statement  -  23 February 2024

The FATF welcomes Uganda’s significant progress in improving its AML/CFT regime. Uganda strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in February 2020 including by: (1) adopting a national AML/CFT strategy; (2) enhancing the use of MLA and maintaining statistics; (3) developing risk-based supervision of the financial and DNFBP sectors; (4) assessing the ML/TF risks related to legal persons and ensuring that competent authorities have timely access to accurate basic and beneficial ownership information; (5) pursuing ML investigations and prosecutions, applying ML charges consistent with the country’s risk profile and establishing procedures to trace and seize proceeds of crimes; (6) demonstrating an ability to conduct TF investigation and prosecution; (7) addressing the technical deficiencies in the legal framework to implement PF-related TFS; (8) developing an outreach and risk-based oversight plan to protect its NPO sector from potential TF abuse. Uganda is therefore no longer subject to the FATF’s increased monitoring process.

Uganda should continue to work with ESAAMLG to sustain improvements in its AML/CFT system, including by ensuring its oversight of NPOs is risk-based and in line with the FATF Standards rather than classifying all NPOs as obliged entities. Uganda is strongly encouraged to continue cooperating with ESAAMLG on this issue.

Compliance with FATF Recommendations

The last follow-up to the Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Uganda was undertaken in 2022. According to that Evaluation, Uganda was deemed Compliant for 15 and Largely Compliant for 8 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness & Technical Compliance ratings.

US Department of State Money Laundering assessment (INCSR)

Uganda was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -

Uganda’s banking and financial sectors are growing in size and sophistication.  The country has a total of 25 commercial banks, 84 percent of which are foreign-owned, and more than 300 non- bank financial institutions. Only 20 percent of Ugandans have deposits in the formal banking sector, with the rest of the populace relying on cash transactions or alternative forms of banking. Money transfers and payments through mobile phones (M-payments), for instance, have become key providers of basic, if informal, financial services for low-income earners who cannot afford the charges levied by the formal banking system. M-payments provide needed financial services to Uganda’s unbanked population, much of which lives in remote areas of the country. Annual remittances are one of Uganda’s largest sources of foreign currency.

Uganda’s cash-based informal economy provides a fertile environment for money laundering. Its lack of intellectual property rights legislation feeds a large black market for smuggled and/or counterfeit goods. Currently, most laundered money comes from domestic proceeds, much of which stems from unchecked corruption. Real estate and casino operations are of particular concern. Uganda’s inability to monitor formal and informal financial transactions, particularly informal trade along porous borders with South Sudan, Kenya, Tanzania, and the Democratic Republic of Congo, could render Uganda vulnerable to more advanced money laundering activities and potential terrorist financing. Uganda’s black market takes advantage of these borders and the lack of customs and tax collection enforcement capacity.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           26

World Governance Indicator – Control of Corruption             17

Corruption constitutes a major challenge for businesses operating or planning to invest in Uganda. The police, the judiciary and procurement are areas where corruption risks are very high and under-the-table cash payments are expected. The core of Uganda's legal anti-corruption framework is the Anti-Corruption Act, the Penal Code, the Inspectorate of Government Act 2002, the Public Finance Management Act 2015 and the Leadership Code Act 2002 (LCA). The Penal Code provides instruments to deal with various corruption offenses including embezzlement, causing financial loss, abuse of office and fraud. The LCA is designed to increase transparency and to curb corruption among senior public officials; it also criminalizes attempted corruption, active and passive bribery, extortion, bribery of a foreign public official and abuse of office. Under the LCA, gifts or donations must be declared if they exceed five currency points in value. Corruption challenges are exacerbated by weak law enforcement, which fuels a culture of impunity. There is no distinction between a bribe and a facilitation payment under Ugandan law. For further information - GAN Integrity Business Anti-Corruption Portal

Uganda’s investment climate presents both important opportunities and major challenges for U.S. investors. With a market economy, ideal climate, ample arable land, a young and English-speaking population, and ongoing development of fields containing at least 1.4 billion barrels of recoverable oil, Uganda offers numerous opportunities for investors. In 2022, Uganda lifted all restrictions that had been imposed to curb the spread of COVID-19, which briefly inspired confidence in the economy, but prospects for economic recovery fell following rising commodity prices caused by supply chain shocks and the effects of Russia’s war in Ukraine. In 2022, inflation peaked at 10.7%, the highest rate since August 2012, because of surging fuel prices that reached historic highs, contributing to high transport prices, higher production costs, and eventually a tightening of monetary policy by the Bank of Uganda (BOU). In the Fiscal Year (FY) 2021/22, Uganda’s economy grew by 4.7%, a slight improvement from 3.5% in FY 2020/21. According to the BOU, Foreign Direct Investment (FDI) increased by 37% to $1.4 billion in 2022 compared to $911 million in 2021. The growth in FDI was influenced by oil sector project-related spending. The BOU forecasts that pre-oil investment will average $2 billion annually until first oil is achieved in 2025. The ongoing investment in drilling rigs and the oil pipeline also have large import components.

Uganda maintains a liberal trade and foreign exchange regime. Uganda also sustained liberal policies even as commodity prices rose, and policymakers ignored political pressure to implement a subsidy regime to cushion the population from rising prices. In 2022, the IMF approved the third tranche of the Extended Credit Facility (ECF) to the government to help the country deal with the COVID-19 crisis and boost private-sector led growth. Uganda received the first tranche of $258 million in June 2021, the second tranche of $125 million in March 2022, and the IMF approved the third tranche of $240 million in December 2022. The ECF conditions included the GOU’s implementation of reforms on increased social spending, ensuring debt sustainability, and improved governance. As the economy continues to recover to pre-pandemic levels, Uganda’s power, agricultural, construction, infrastructure, technology, and healthcare sectors present attractive opportunities for U.S. business and investment.

President Yoweri Museveni and government officials vocally welcome foreign investment in Uganda. However, the government’s actions do not always align with its rhetoric. The closing of political and democratic space, poor economic management, endemic corruption, growing sovereign debt, weak rule of law, growing calls for protectionism from some senior policymakers, and the government’s failure to invest adequately in the health and education sectors all create risks for investors. U.S. firms often find themselves competing with third-country firms that cut costs and win contracts by disregarding environmental regulations and labor rights, dodging taxes, and bribing officials. Shortages of skilled labor, a complicated land tenure system, and increased local content requirements also impede the growth of businesses and serve as disincentives to investment.

An uncertain mid-to-long-range political environment also increases risk to foreign businesses and investors. President Museveni was reelected in January 2021. He has led Uganda for more than 36 years and appears to have no plans to step down. Domestic political tensions and restrictions on democratic institutions continued following the 2021 elections. Parliament recently passed the Anti-Homosexuality Act of 2023, which, if assented by President Museveni will further criminalize LGBTQI+ individuals. Many of Uganda’s youth, a demographic that comprises 77% of the population, openly clamor for change. However, President Museveni has not provided any indication that he or his government are planning reforms to promote more inclusive, transparent, and representative governance.

On the legislative front, Uganda’s parliament passed amendments to seven existing laws to remove Uganda from the Financial Action Task Force (FATF) gray list. The amendments to Trustee Incorporation (Amendment) Act 2022, The Partnerships (Amendment) Act, Anti-Terrorism (Amendment) Act 2022, Insolvency (Amendment) Act 2022, Cooperative Society (Amendment) Act 2022, Anti-Money Laundering (Amendment) Act 2022, and Companies (Amendment) Act 2022 aimed at improving anti-money laundering and combatting the financing of terrorism (AML/CFT). Some of the amendments include improved identification of beneficial owners and greater regulatory oversight including powers to impose levies on entities or persons violating AML/CFT provisions.

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Country Links

Capital Markets Authority (Uganda) (CMA)

Insurance Regulatory Authority of Uganda