FATF status

Uganda is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement - 23 February 2024

The FATF welcomes Uganda’s significant progress in improving its AML/CFT regime. Uganda strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in February 2020 including by: (1) adopting a national AML/CFT strategy; (2) enhancing the use of MLA and maintaining statistics; (3) developing risk-based supervision of the financial and DNFBP sectors; (4) assessing the ML/TF risks related to legal persons and ensuring that competent authorities have timely access to accurate basic and beneficial ownership information; (5) pursuing ML investigations and prosecutions, applying ML charges consistent with the country’s risk profile and establishing procedures to trace and seize proceeds of crimes; (6) demonstrating an ability to conduct TF investigation and prosecution; (7) addressing the technical deficiencies in the legal framework to implement PF-related TFS; (8) developing an outreach and risk-based oversight plan to protect its NPO sector from potential TF abuse. Uganda is therefore no longer subject to the FATF’s increased monitoring process.

Uganda should continue to work with ESAAMLG to sustain improvements in its AML/CFT system, including by ensuring its oversight of NPOs is risk-based and in line with the FATF Standards rather than classifying all NPOs as obliged entities. Uganda is strongly encouraged to continue cooperating with ESAAMLG on this issue.

Compliance with FATF Recommendations

The last follow-up to the Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Uganda was undertaken in 2024. According to that Evaluation, Uganda was deemed Compliant for 16 and Largely Compliant for 9 of the FATF 40 Recommendations. It remains Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness ratings.

Despite having adequate laws and institutions to combat corruption, Uganda continues to face significant challenges, with endemic corruption hindering investment and business operations. Transparency International ranked Uganda 141 out of 180 countries in its 2023 Corruption Perceptions Index, highlighting the persistent issue of corruption, particularly in government procurement processes. While some larger companies implement internal controls, the informal sector, which comprises 80% of the workforce, often lacks such measures, contributing to a culture of impunity and limited accountability for corrupt acts.

Uganda's economy is characterized by a market-oriented structure with significant opportunities for investment, particularly in sectors like oil, agriculture, and services. In 2023, the economy grew by 5.2%, recovering from the impacts of the COVID-19 pandemic, although challenges such as corruption, high inflation, and political instability remain prevalent. Foreign Direct Investment (FDI) surged by 79.2% to $2.9 billion in 2023, largely driven by pre-first oil investments, despite ongoing concerns regarding governance and human rights.

Uganda's investment climate offers significant opportunities, particularly in sectors like oil, agriculture, and technology, bolstered by a young, English-speaking population and a recovering economy post-COVID-19. However, investors face challenges such as persistent corruption, political instability, and human rights concerns, which have been exacerbated by recent legislative actions and the government's inconsistent support for foreign investment. Despite these hurdles, foreign direct investment has surged, particularly in oil-related projects, indicating a complex but potentially rewarding investment landscape.