Uganda off the FATF Grey List: What Does this mean for NGOs?

Uganda has finally exited the FATF’s grey list – which consists of jurisdictions considered by the global watchdog –? Financial Action Task Force (FATF), to have weak measures to combat money laundering and terrorist financing (AML/CFT). This exit indicates that Uganda demonstrated strengthened effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that were identified during the? Mutual Evaluation back in 2016.

Some of the deficiencies identified by the regional FATF-style regional body Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), included staffing constraints at the NGO Bureau, and its board which they deemed insufficient for effective NPO monitoring activities, including monitoring patterns of inflows and usage of funds by the organisations.

In addition, it was determined that an outreach assessment of the NPO sector’s vulnerability to terrorism financing (TF) should have been conducted, given the vulnerability of Uganda to TF at the time of evaluation and the possibility of the NPO sector being abused as a conduit to channel funds to be used for TF activities.

To address these deficiencies, Uganda developed an action plan to strengthen its AML/CFT regime and address the concerns raised by FATF. The action plan included among others, measures such as; assessing the ML/TF risks related to accountable persons (a second National Risk Assessment of ML and Terrorism Financing Risk Assessment for Non-Profit Organisation) and developing an outreach and risk-based oversight plan to protect its NPO sector from potential TF abuse.

Implications for NGOs in Uganda

The removal of Uganda from the FATF Grey List has several implications for NGOs operating in the country.

Reduced Regulatory Burden

The consequential effect of Uganda’s removal from the grey list is a potential reduction in the regulatory burden that NGOs previously encountered. The Grey List status brought about heightened regulations, numerous reporting obligations, and unwarranted scrutiny from financial institutions. With this removal, NGOs can anticipate a more efficient and streamlined regulatory environment, offering relief from the administrative challenges they once had to navigate.

Enhanced Reputation

Uganda's removal from the list underscores a robust AML/CFT regime. This improvement bolsters the country's international reputation, offering potential benefits for NGOs. A strengthened reputation can foster increased trust and confidence in the operations and activities of NGOs in Uganda, potentially attracting greater collaboration and funding from partners and donors.

Regulatory Efficiency?

With Uganda's removal from the list and the revised FATF Recommendation 8, there's an opportunity for implementing risk-based monitoring for NGOs in Uganda. This shift allows resources and monitoring efforts to be concentrated on high-risk NPOs, alleviating the burden on low-risk organisations. This targeted approach promotes a more efficient and effective application of the law.

Sustaining Advocacy for Mitigating ML/TF Risks Among NGOs

With the ongoing high lack of awareness regarding ML/TF risks and regulatory obligations under the AML/CFT legal framework, there exists a crucial opportunity for continued advocacy. DPI, through our regional AML/CFT clinics, remains dedicated to raising awareness among NGOs about ML/TF risks, providing guidance on mitigation strategies, and educating them about the pertinent legal framework.