Anti-Money Laundering: Uganda’s Financial Sector faces fresh grey listing as SACCOs, MFIs fail to comply

KAMPALA, UGANDA – Uganda’s financial sector is facing a significant threat as Savings and Credit Co-operatives (SACCOs) and Microfinance Institutions (MFIs) continue to flout Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) regulations. The failure to comply with these regulations puts Uganda at risk of being grey-listed by the Financial Action Task Force (FATF), a global watchdog that sets standards for combating money laundering and terrorist financing.

According to the Financial Intelligence Authority (FIA), fewer than 20 SACCOs and MFIs have registered with the authority, which is the first step towards complying with AML/CFT regulations. This lack of compliance is a significant concern, as SACCOs and MFIs handle a substantial portion of Uganda’s financial transactions.

Phionah Nabaggala, FIA’s Manager for Training and Outreach, emphasized the need for SACCOs and MFIs to develop internal AML/CFT policies and train their employees to adhere to them. “Compliance with AML/CFT regulations is crucial for maintaining Uganda’s financial integrity and preventing illicit financial activities,” she said.

Sheila Birungi, head of the legal department at UMRA, highlighted the importance of addressing compliance gaps in SACCOs and MFIs, particularly in reaching underserved populations through Village Savings and Loan Associations (VSLAs). “We need to ensure that these institutions are operating with the highest level of integrity and transparency,” she said.

Uganda’s financial sector has made significant progress in recent years, and the country has been removed from the FATF’s grey list. However, the current non-compliance by SACCOs and MFIs puts this progress at risk. The government and regulatory authorities must take urgent action to ensure that these institutions comply with AML/CFT regulations and maintain Uganda’s financial integrity.