Poor identification hampers money laundering fight
Feb 10, 2010
BANKS cannot easily detect and prevent money laundering due to lack of a national identification system. Money laundering is when large amounts of money obtained from criminal dealings is made to appear to have originated from a legitimate source.
By Taddeo Bwambale
BANKS cannot easily detect and prevent money laundering due to lack of a national identification system.
Money laundering is when large amounts of money obtained from criminal dealings is made to appear to have originated from a legitimate source.
Finance minister Syda Bbumba said the lack of an identification system in Uganda was a challenge to the implementation of an effective law against the vice.
In a recent speech read by the finance state minister, Jachan Omach, Bbumba said financial institutions were facing a challenge in implementing basic principles to identify money launderers.
Omach was presiding over a sensitisation workshop organised by the Bank of Uganda for the parliamentary finance committee on the Anti-Money Laundering Bill 2009.
Bbumba said although banks were using alternative means to identify customers, such as utility bills and employers’ introduction letters, the measures were not effective.
She cited Uganda’s porous borders as conduits of courier-based money laundering and the transportation of ammunition for terrorism.
Bbumba explained that the limited use of banking services and the lack of public awareness on the negative consequences of money laundering had heightened the vice. She added that large-scale cash transactions were not going through the formal financial system.
Under the proposed anti-money laundering law, persons transporting more than sh30m across the border will have to notify the customs and excise department of Uganda Revenue Authority.
Money-launders will face up to 15 years in jail or pay a maximum fine of sh2b.
The Bill also gives court the power to confiscate property obtained through money laundering. A person who tips off an offender commits an offence and faces a prison sentence of up to five years or a maximum fine of sh180m.
The Bank of Uganda governor, Tumusiime Mutebile, said banks that do not comply with the law would face tough action, including payment of fines and withdrawal of their licences.
He observed that if laws were not put in place to address the crime, financial institutions would continue to be controlled by criminal organisations.
Uganda is the only East African country which has no law addressing money laundering.
BANKS cannot easily detect and prevent money laundering due to lack of a national identification system.
Money laundering is when large amounts of money obtained from criminal dealings is made to appear to have originated from a legitimate source.
Finance minister Syda Bbumba said the lack of an identification system in Uganda was a challenge to the implementation of an effective law against the vice.
In a recent speech read by the finance state minister, Jachan Omach, Bbumba said financial institutions were facing a challenge in implementing basic principles to identify money launderers.
Omach was presiding over a sensitisation workshop organised by the Bank of Uganda for the parliamentary finance committee on the Anti-Money Laundering Bill 2009.
Bbumba said although banks were using alternative means to identify customers, such as utility bills and employers’ introduction letters, the measures were not effective.
She cited Uganda’s porous borders as conduits of courier-based money laundering and the transportation of ammunition for terrorism.
Bbumba explained that the limited use of banking services and the lack of public awareness on the negative consequences of money laundering had heightened the vice. She added that large-scale cash transactions were not going through the formal financial system.
Under the proposed anti-money laundering law, persons transporting more than sh30m across the border will have to notify the customs and excise department of Uganda Revenue Authority.
Money-launders will face up to 15 years in jail or pay a maximum fine of sh2b.
The Bill also gives court the power to confiscate property obtained through money laundering. A person who tips off an offender commits an offence and faces a prison sentence of up to five years or a maximum fine of sh180m.
The Bank of Uganda governor, Tumusiime Mutebile, said banks that do not comply with the law would face tough action, including payment of fines and withdrawal of their licences.
He observed that if laws were not put in place to address the crime, financial institutions would continue to be controlled by criminal organisations.
Uganda is the only East African country which has no law addressing money laundering.