This article was written by Mr.Noah E Mwesigwa,Ms Brigitte Kusiima and was published in the IFLR 2009 Edition
Introduction
Uganda's geographic position in East Africa and its turbulent past has made it susceptible to being used as a transit point for illegitimate funds and resources. These have been used for all manner of illicit purposes locally and also to destabilize many of its neighbours including Somalia, Southern Sudan and the Democratic Republic of Congo. This has affected the financial sector, the economy and Uganda's international relations.
With the stability and economic growth characterized over the last 24 years, and taking into consideration international policies, the need to address the issue of Money Laundering has become of paramount importance. Legislation against this has been in the works since 2002 and has culminated in the Anti-Money Laundering Bill No 13 of 2009 before our Parliament.
The policy and principle behind the Bill is to combat money laundering through criminalizing money laundering and controlling the financing of terrorism.
Whereas the current legal regime in particular the Financial Institutions Act 2004 and Central Bank guidelines attempt to set up mechanisms for the curbing of money laundering in financial institutions by demanding inter alia a thorough background check on customers, flagging suspicious transactions and categorizing risk customers, the area of operation of this Act is restricted to Financial institutions and not other areas like casinos, real property, minerals etc.
The Anti-Money Laundering Bill has sought to extend the scope by defining money laundering to relate to illegitimately obtained property including the concealing or disguising of the nature, source, location, disposition or movement of the proceeds of crime or any activity constituting a crime. Property has been given a much wider scope than financial transactions. It is in part similar to that given under UK common law and includes property or assets of any kind, nature or description including currency, monetary instruments, vehicles, aircraft, ships, art, gems, precious metals, land and legal documents or instruments evidencing title in such property or assets.
The Bill is very ambitious in its provisions and it will certainly take more than mere economic and political will to have the same fully implemented and to fulfil the purpose for which it has been enacted. This is in part because the Anti Money Laundering Bill No 13 of 2009 places a heavy obligation on all "accountable persons" to verify the customer's identity using reliable independent source documents, data or information including passports, birth certificates, identity cards. The accountable persons referred to in the Bill include advocates, executors, trustees, casinos (including internet casinos), real estate agents, dealers in precious metals and gems, financial institutions, licensed brokers, insurance companies, registrars of lands and companies and all licensing authorities.
Whereas this may make perfect sense especially in light of the know your customer policy of financial institutions the reality is that many of these accountable persons lack the necessary man power and resource information to undertake detailed vetting of clients or transactions as required by the Bill. This is worsened by the fact that Ugandans do not have a national identity document and other documents that may be relied upon to ascertain identity are not very well controlled and are easy to abuse.
It is also clear that the executive while preparing this Bill worked on the wrong presumption that all other key players in the enforcement of this law have in place good systems or software. This is not the case for Uganda. Various registries have only just been computerized and only a small fraction of their records have been subjected to data input. Further wheras the country has a fully operational Interpol Office, the fingerprinting and vetting process to compile thorough criminal records faces certain challenges.
Regrettably the fact is that many of these accountable persons for example the advocates, Companies' and Land's registries etc are dependent on the utmost good faith of their clients and practically have no way of verifying most of the information given to them.
The Bill however has several positives that cannot be overlooked, for example, any accountable person providing information in good faith is immune from liability. It further provides for the creation of a Financial Intelligence Authority and it expressly increases the extra territorial jurisdiction of Ugandan Courts over offences connected to money laundering. It enables the extradition to Uganda of fugitives for trial in Ugandan Courts even where the offence is committed outside Uganda and for the confiscation of property in Uganda connected to a crime committed against the laws of another state.
The Bill further provides for the seizure, freezing and forfeiture of property that is the subject of money laundering and for lifting of the veil when assessing the value of the benefits derived by a person from the commission of a crime. This is very significant in as far as recovery is concerned.
The Bill however appears to rule out the defence of double jeopardy by categorically stating that the crime of money laundering is a separate crime distinct from and in addition to other crimes under the laws of Uganda. This makes it possible for a party to have parallel proceedings that may in essence arise out of the same circumstances and both with penal consequences.
It is worth noting however that the Bill prohibits any person from "intentionally" participating in money laundering. This invariably creates a defence open to a party accused of money laundering in that "intent" must as of necessity be proven. Intent unfortunately always remains a matter of fact.
Although the Bill is a welcome addition to our legislation and in particular for the financial sector, the economy and regional stability, it is important that other facilities, services and institutions are improved upon to ensure that the provisions of the Bill can actually be implemented in practice. Without this being put in place the Bill will remain just another redundant piece of legislation.
