Fighting money laundering in all its forms

By Agnes E. Nantaba

Sydney Asubo is the in-coming executive director of the Financial Intelligence Authority (FIA), which was set up under the Anti- Money Laundering Act. He spoke to Agnes E. Nantaba about their mandate and the vice of money laundering in Uganda.

What are the key elements of your management philosophy as a manager?

One of the core principles that has run through my career is leading by example, which among other things, includes being selfless and team working. I inculcate and encourage hard work and general good work ethics with little tolerance for indiscipline.

The core mandate of FIA is outlined in the Anti-money Laundering Act but what we do is to receive, analyze and disseminate financial intelligence in the area of money laundering and terrorism financing. We are supposed to ensure compliance with the Act.

This mandate requires confidentiality and absolute security of the information we hold, constant vigilance, and continually upgrading of our skills as the criminals are always improving their own skills.

The FIA requires great expertise and experience in investigation.

What do you bring to the institution in line with that?

Having experience in investigation helps but the core skill is the ability to analyze financial data because we don’t do full blown investigations but rather basic investigation. Our work is to provide intelligence and forward it to sister organizations that deal in law enforcement. For instance, terrorism financing and money laundering are handled by the Police, URA handles tax evasion while loss of government or public funds is handled by the Inspectorate of Government.

In terms of analysis, I am an advocate of almost 20 years standing most of which have been spent as a prosecutor, first at DPP and later at Inspectorate of Government. Over time, I have developed leadership and analytical skills.

One of your major tasks was to set up the FIA in accordance with the Anti- Money Laundering Act 2013. To what extent have you executed the task?

We have done very well. We have secured the office premises where we currently are. We have developed the organizational structure of the Authority working hand in hand with ministry of finance. We have ensured that we have a board. We have also issued guidelines to give effect to the Act and these guidelines have enabled the reporting of suspicious transactions.

We have signed MOU’s with regulators like URA and Capital Markets Authority (CMA). We are in discussions with BOU, IRA and URSB. We have established working relationships with the police and DPP. FIA is now the secretariat to the Uganda anti money laundering committee.

We have signed MOU’s with 13 countries within 8 months, which is a record in Eastern and Sothern Africa. Countries like Angola, Ethiopia, Kenya, Tanzania, Malawi, Zambia, Zimbabwe, South Africa, Botswana, Seychelles, Mozambique, Swaziland and Lesotho. We are in negotiations to sign MoU’s with Namibia and Mauritius. All these are members of Southern and Eastern Africa Anti-money Laundering Group.

How is the work of FIA different from that of Bank of Uganda in terms of monitoring finances?

Absolutely different; BoU is the banker to government and it regulates and provides licenses to banking and forex bureaus. It also does the monitoring. Ours is broader and goes beyond banking.

We look out for and provide intelligence regarding larger suspicious transactions, those engaged in using the financial sector for committing crimes just to make sure that the sector runs smoothly. We also look out for the criminals in the banking industry, real estate, insurance companies and brokers, capital markets, real estate agents, NGOs and dealers in precious stones and metals.

How is FIA equipped in terms of personnel and other resources to execute its mandate of enhancing the identification of proceeds from criminal activities?

In terms of resources, in the coming financial year, we have a budget allocation. We are still finalizing with the finance ministry. The funds are sufficient for our current operational needs. We also have a limited number of staff but now that we have a board, that issue will be addressed.

What however remains is the procurement of electronic platforms for receiving data because right now we are receiving information manually. We must first recruit and then provide tools for the work.

But most important of it all is that this has been a base year; our major operations will start in 2015/16.

Apart from commercial banks and other financial institutions, where else does FIA monitor?

The law refers to them as accountable persons and they are 15 in number. They are provided for in the second schedule; advocates and accountants, casinos, real estate agents, dealers in precious metals and stones, financial institutions or banks, brokers and dealers under CMA, insurance companies, registrar of companies, registrars of land, UIA, those who deal in transfer of money like Western Union and Money Gram, mobile money companies, those dealing in forex, NGOs, churches and other charitable organizations.

There were reports about Ugandans having chunks of money stashed away in secret Swiss bank accounts How far has FIA gone in following up on the matter?

We are liaising with Swiss authorities but there is a challenge in that tax evasion is not a crime in Switzerland and yet one of the cornerstones of mutual legal assistance is the principle of double criminality. In other words, you cannot provide legal assistance to a country where it’s not a crime.

We now need to first establish what other crime these people have committed apart from tax evasion. It’s not enough evidence to ask Switzerland whether this money is there illegally. Uganda is supposed to write to Switzerland that someone embezzled money and we suspect that he/she is keeping it in a bank in Switzerland.

If you say people have money in Swiss accounts, the fact that they have money in foreign accounts does not constitute a crime. If you insist that it’s stolen money, we need to go ahead and prove and confirm the source of money then we can make a formal request and can have the money sent back to Uganda.

Part of the mandate of the Authority is to create public awareness about matters related to financial laundering in the country.  How far have you gone in executing this role?

We started by adopting outreach to the accountable persons and those who have obligations under the law. We have had meetings with BoU, Uganda Bankers Association, IRA, CMA, Uganda Insurance Association, Police CIID and URA among others.

We’ve also had meetings with ICPAU and the Lottery Board. We have also run the guidelines in the press including The Independent. We’ve set up a website, which is up and running and accessible to anyone. We intend to have more media campaigns in this financial year.

What penalties await those who are found guilty of embezzling public funds?

There are two categories of offences under the Act. Predicate offences are those that generate the money that is being laundered because before you launder money you first steal it. The penalty for money laundering if committed by a natural person or human being is 15 years or a fine not exceeding 100,000 currency points which is an equivalent of Shs 2bn or both. If committed by a company, then the penalty in Section 136 (1b) is 200,000 currency points an equivalent of Shs 4bn.

This is the main offence but there are offences like tipping off where an employee of FIA tips off a suspect, facilitating money laundering or if you hide or destroy a document, failure to report suspicious transactions etc. Under Section 10 of the law, every one entering or leaving the country with Shs 30 million or more is supposed to declare it to URA. It’s a crime to refuse to do so or to make a false declaration.

What challenges do you face in executing your roles especially in fighting money laundering in Uganda?

The biggest challenge is the large informal sector. There is a very big percentage of Ugandans that operate outside the formal financial sector.  Being a largely cash based economy, it is a challenge to identify crimes in that area. We can only monitor what goes on in the formal sector.

There is still a lack of awareness of the law by the general population and the accountable persons still lack awareness of their responsibilities. That is why we need to increase our awareness campaigns.

Also, the capacity of law enforcement to adequately investigate money laundering cases is still low because of the complexity of money laundering schemes.

FIA was set up towards the end of 2014. How many cases of money laundering have you handled and how successful have you been in dealing with them?

The official establishment of FIA was on July 1, 2014 and it started operations in September the same year. We have provided intelligence to the Police who then investigate and there after forwards to DPP. However as of now, none of the cases we initiated have reached court but I am aware that there are some that are about to get there.

Are there special diligence measures for certain types of offenders, for example, Politically Exposed Persons (PEP)?

Under the law, there are two categories of customers. there are ‘low risk customers’ like your grandmother in the village whose chances of laundering the money are slim given the fact that she only receives not knowing the source of the money or whether it was stolen.

But there are ‘high risk customers’ who include Politically Exposed Persons (PEP’s) – individuals who are or have been entrusted with prominent positions in the country for instance senior government executives, judicial officers, military officials, close associates of such individuals, heads of State, and other important persons.

Because of their position in society, they have capacity to access money so banks should apply enhanced due diligence under Section 6 (g). For the low risk, they take the normal due diligence to make sure they have their address and other basic details.

When dealing with the PEPs, they must take reasonable measures to establish the source of funds; conduct ongoing monitoring of the business relations and must have appropriate risk management systems to determine whether they are PEPs.

Where do you see FIA and state of money laundering in Uganda in the next few years?

We are going to be absolutely central to combating money laundering and all the predicate cases such as corruption and identifying terrorist funds.  We shall ensure that there is a proper regulatory and institutional framework for anti money laundering and combating the financing of terrorism.

We shall ensure that many Ugandans know the evils of money laundering and terrorism financing and how they can help to identify money launders and terrorist financiers.