final paper kirunda amla acb_3

PARLIAMENT WATCH UGANDA

Supported By

RHETORIC OR REALITY?

AN ANALYSIS OF THE ROLE OF THE ANTI MONEY LAUNDERING ACT AND THE ANTI CORRUPTION BILL IN

THE FIGHT AGAINST CORRUPTION IN UGANDA

By

Robert KirundaPartner,

Kirunda & Wasige Advocates

Legal Analysis Bills SeriesFor

Parliament Watch UgandaCentre for Policy AnalysisKanjokya House, Plot 90,

Kanjokya StreetKampala, Uganda


Table of Contents

Executive Summary 3

Introduction 5

Jurisdictional Exclusivity 8

Money Laundering As a Crime 9

Obligations of Accountable Persons 10

The Financial Intelligence Authority 15

Recovering the Proceeds of Corruption 18

International Cooperation/Mutual Legal Assistance 21

Rhetoric or Reality? 23

Conclusion 27

Key Recommendations 27

References 29


Executive Summary

Corruption is the economic crime with the furthest reaching implications in Uganda. Corruption has been the subject of legislation and litigation inUganda. Some of this legislation focuses specifically on corruption, while other legislation serves an ancillary role in the fight against corruption. But it is impossible to attempt to benefit from the proceeds of corruption without laundering them first. To this extent, these vices are not mutually exclusive. To add to the considerable list of anti-corruption legislation already on the books, the Uganda Parliament recently enacted the Anti Money Laundering Act of 2013 (AMLA).

This paper examines the AMLA, which now forms the main axis of AML legislation in Uganda. The paper is limited in its analysis to the context of corruption. The paper analyses the various parts of the Act, highlighting how useful they might be in the fight against corruption. The paper also examines the usual ways in which the proceeds of corruption are laundered and some vulnerabilities to which attention should be paid. At the time of writing, there are ongoing efforts to amend the Anti-Corruption Act to deal largely with evidence gathering and enforcement of confiscation orders. The paper considers to what extent these amendments might relate with or affect the AML enforcement regime.

In the final analysis, the paper concludes that although some parts of the Act were fairly drafted and in line with both international standards and best practices, there are key areas for improvement. There is also need to adopt an approach that harmonizes the legal regime and enforcement mechanisms on AML and anticorruption in Uganda. Additionally, the gravity of the effect this law will have on the fight against corruption will depend on the political will of those charged with its enforcement.

Along with these conclusions, the paper makes the following recommendations:

The AMLA will only be relevant to the extent that it is actually enforced. It is recommended therefore that:(a) The necessary Regulations, which hopefully will contain the

necessary Forms, be enacted sooner than later; and

(b) the Financial Intelligence Authority be put in place sooner than later.

The areas in which the AMLA should have cross-referenced other legislation need to be studied further, and appropriate action taken in a bid to achieve harmonization of the entire legal framework.


Specifically, it is important to harmonize the AMLA with the other body of Anti Corruption legislation in various areas, including investigation and asset recovery.

Various loopholes in the Act need to be addressed either by way of substantive regulations or by amendment of the Act. Some of the areas are:(a) Evidence gathering on vessels flying the Uganda flag; (b) Jurisdiction regarding vessels destined for Uganda;(c) The role of Licensing Authorities and other government Agencies

and Departments in evidence gathering(d) Defining key terms in some of the provisions in order to avoid

ambiguity and misuse of power.(e) Redefining the process for the dismissal of the Executive Director

and the attendant terms.

It is important to have an independent Asset Recovery Unit/Agency to enforce the provisions on confiscation and recovery. This need not be a totally new organization. The Kenyan legislation for instance provides for an institution comprised of persons from within an already existing government framework.

It is troubling to note that there are efforts to amend the Anti-corruption Act that have not taken into account the AMLA. To this extent, there is also need to adopt a convergence strategy towards AML and the anticorruption crusades in Uganda.

Relatedly, it is important to explore and reconcile all the areas of departure from similar legislation in the region, especially in light of the fact that as an East African Community, harmonization of both laws and their enforcement is critical.

It is recommended that the law be amended to provide for judgments being enforceable once they are final in the jurisdiction from which they arise. This should replace the current position where judgments will serve as evidence in fresh proceedings to determine whether one was laundering money or not.


While it is recognized that corrupt practices can, in some countries, predicate the offence of money laundering, we first need to understand how corruption differs from such offences as money laundering and where the nexus between corruption and such other offences in the private and financial sectors lies. Also, corruption, like many other financial crimes, has a cultural and political dimension to it. In many countries, poor economic conditions have led to a general acceptance of corruption as a way of life. Also, the issue of political strongholds can present an obstacle to the fight against corruption. And political strongholds can take root in any country, irrespective of that countrys level of development. So, no matter how sophisticated the methodology of fighting corruption is, if the political culture in a particular country is not committed to or does not favor the fight against corruption, then the net result will be lip service to anti-corruption and good governance initiatives.1

IntroductionThere is no single internationally recognized definition of corruption.Functionally, the term is most commonly defined as the use of public office for private gain. 2 Under the Anti Corruption Act, 2009, a person acts corruptly when they purposely [do] an act which tends to corrupt or influence someone to do an act or omission contrary to established procedures.3 Elsewhere, the debate continues as to whether corruption greases or sands the wheels of economic growth. 4 But the evidence suggests that the negative effects of corruption are stronger than any possible positive effects.5

Corruption has many facets and takes different forms. K. Mwenda in his book Public International Law And The Regulation Of Diplomatic Immunity In The Fight Against Corruption, 6 discusses the challenges of offering a satisfactory legal definition of the term corruption. He further the domestic and international challenges of the fight against corruption and examines in detail the various levels at which corruption affects a nation. One major point that is often not discussed efficiently in the literature is the nature and impact of private sector corruption.7

In Uganda in particular, the telling effect of corruption is best understood when one considers the fact that the culprits in the Global Fund and GAVI Fund scandals stole from HIV/AIDS patients. One only has to look at the

1 Kenneth K Mwenda (2011): Public International Law And The Regulation Of Diplomatic Immunity In The Fight Against Corruption, Pretoria University Law Press p. 382 FATF: Laundering the Proceeds of Corruption (July 2011)3 See section 1 of the Ugandan Anti Corruption Act, 2009. Section 2 thereof further sets out a laundry list of various instances in which one commits the offence of corruption but it is important to note that it does not offer a clear definition.4 FATF: Laundering the Proceeds of Corruption (July 2011) at p.9, Generally see also, Aidt, T: Corruption, Institutions and Economic Development, Oxford Review of Economic Policy (2009), 25(2): 271-291, Bardhan, P.: Corruption and Development: A Review of Issues, Journal of Economic Literature, 35(3): 1320 1346.5 Globally accepted negative effects include: reducing private investment, adversely affecting quality and quantity of private infrastructure, reducing tax revenue/narrowing tax base, creating a narrower/shallow and less efficient financial system, encouraging capital flight, reducing human capital formation, adverse distributional effects that affect the poor the most, lower literacy rates, higher mortality rates, creates nests in which crime flourishes by allowing criminals to freely enjoy their loot, as well as resulting in overall worse human development outcomes.6 Op.cit note 17 Id. See chapter 3

PARLIAMENT WATCH UGANDApathetic living conditions of the men and women of the Uganda Police Force;or consider the plight of the impoverished people of Northern Uganda for whom funds for the Northern Uganda Social Action Fund were intended, to understand that there is no justification for letting the corrupt go scot-free. These are only a few examples of how the instances of corruption can affect and even disrupt lives and society.

Money laundering, on the other hand, is defined as the process of turning illegitimately obtained funds into seemingly legitimate property.8 It includes concealing or disguising the nature, source, location, disposition or movement of the proceeds of crime.9 The image below illustrates a typical Laundering cycle.

Source: https://www.unodc.org/unodc/en/money-laundering/laundrycycle.html (on February 19 2014)

There is an established two way relationship between corruption and economic development. First, corruption affects economic development. And secondly, economic development determines the levels of corruption. Anti-Money Laundering (AML) policies aimed at fighting corruption thus present a useful element in economic growth strategies.10 The Financial Action Task Force believes that a robust AML regime based on its Recommendations would help countries better safeguard the integrity of the public sector, protect designated private sector institutions from abuse, increase transparency of the financial system and facilitate the detection, investigation and prosecution of corruption, AML and asset recovery.11

8 See Section 1 of the Anti-Money Laundering Act, 2013.9 Id. The section continues the definition by referring to any activity which constitutes a crime under section 3 of the Act10 FATF: Laundering the Proceeds of Corruption (July 2011) at p.1011 FATF (2012): Corruption A Reference Guide and Information Note on the use of the FATF Recommendations to support the fight against Corruption available at www.fatf-gafi.org


The global AML movement derives its origins in the need to curb tax evasion and drug trafficking in the United States. Today, in addition to this objective, global AML policies are also influenced by the need to curb terrorist financing and the need to preserve the integrity of the international financial system. In some jurisdictions such as Uganda, however, corruption is a more rampant economic crime than all the above. The main aim of AML processes is to identify and confiscate the proceeds of crime. A pre- requisite for AML to contribute to the fight against corruption is that the corrupt activity needs to be defined as a criminal activity for the purposes of the jurisdiction(s) involved.12 An effective AML regime can make a significant contribution to the fight against corruption in at least two main ways:

(i) it could help uncover evidence of criminal activity through identification of suspicious movements of financial assets, thus increasing the chances of a successful prosecution of the perpetrator of the crime;

(ii) it also enables the tracing of criminal proceeds to facilitate their preservation, recovery and ultimate return to their rightful owner. In the case of State assets that have been pilfered by corrupt officials, these may be returned to their rightful use.13

There is a fairly robust international AML regime that comprises of 3 UN Conventions and two UN Security Council Resolutions.14 Besides creating a number of criminal offences covering a range of corrupt behavior, these international instruments also emphasize the importance of preventing the legitimatization of illicitly obtained funds and in this way, comprise the basic architecture of the international AML regime. In addition to these international instruments, there is a growing body of AML work by notable international forums like the Financial Action Task Force (through its 40+ Recommendations).15

12 Ugandas Anti-Corruption Act criminalizes corruption (which also forms one of the predicate offence for AML). 13 Indira Carr & Miriam Goldby: The UN Anti-Corruption Convention And Money Laundering at P.8 (on file with the Author)14 United Nations Convention Against Illicit Trafficking in Narcotic Drugs and Psychotropic Substances, Vienna, December 20 1988, Effective 1990 to which Uganda is a signatory; United Nations Convention Against Transnational Organized Crime adopted by General Assembly resolution 55/25 of 15 November 2000. Uganda ratified this Convention on 9 Mar 2005; United Nations Convention Against Corruption was adopted by the General Assembly of the United Nations on 31 October 2003 and came into force on 14 December 2005. Uganda Ratified this Convention on 9th September 2004. The two UN Security Council Resolutions are: United Nations Security Council Resolution 1267 and United Nations Security Council Resolution 1373.15 Loosely known as the FATF, the Financial Action Task Force is an inter-governmental body whose purpose is the development and promotion of national and international policies to combat money laundering and terrorist financing.

PARLIAMENT WATCH UGANDAAdditionally, some countries such as the United States, United Kingdom and Germany regularly follow the money by using AML tools. However, it suffices to note that in following the money, most countries pursue predicateoffences, but rarely go after the profit-taking level of the proceeds of crime. Although one of the main drivers of the AML movement globally is the need to address the challenge of terrorist financing, there are even fewer cases of countries apprehending those responsible for terrorist financing. Many countries still focus on the terrorist act, rather than following the money to get to those behind the attacks.

The Ugandan AML regime is now buttressed in the 2013 Anti-Money Laundering Act (AMLA). But, in addition to the Financial Institutions (Anti-Money Laundering) Regulations of 2009,16 the AML regime has been built on the blocks of a fairly wide statutory regime that comprises of: The Penal Code Act;17 the Inspectorate of Government Act 2002, Anti Terrorism Act of 2002; Leadership Code Act 2002, the Public Procurement and Disposal of Assets Act 2003; Anti Corruption Act 2009, and the Electronic Transactions Act 2010.

This paper centrally examines the AMLA, which now forms the main axis of AML legislation in Uganda. The paper is limited in its analysis to the context of corruption. The paper analyses the various parts of the Act, highlighting how useful they might be in the fight against corruption. The paper also examines the usual ways in which the proceeds of corruption are laundered and some vulnerabilities to which attention should be paid.

Jurisdictional ExclusivityThis Act is one of few statutes that contain a very detailed position on jurisdiction. It sets out three criteria under which Uganda shall have jurisdiction on offences under its provisions. These are: (a) where the crime is committed in Uganda; (b) where a crime is committed on board a vessel or aircraft that is flying the Uganda flag or is registered under the laws of Uganda at the time the offence is committed; (c) where the crime is committed by a Ugandan national or a stateless person habitually resident in Uganda.

There are a few concerns to be noted from this provision. Ideally the vessels envisaged in the attendant section include the Presidential jet and other government owned vessels. It is not clear, however, how easy it will be to gather the requisite evidence if one were to attempt to prove that money laundering were done using any such aircrafts or vessels. This is especially

16 These regulations were enacted under the auspices of the Financial Institutions Act and enforced by Bank of Uganda. It is noted that at the time of writing, these Regulations were neither cross-referenced in the Act nor repealed and so still had full force of law.17 Cap 120;

PARLIAMENT WATCH UGANDAso because as will be noted later in the paper, government departments are excluded from accountability under this Act. It is also noted that the provision on vessels does not include vessels or aircrafts destined for Uganda. There have been unconfirmed suspicions that flights run or chartered by United Nations peacekeeping missions have been used to launder money and engage in similar illicit activity. Were this to be true, such flights would still remain outside the purview of the Act.

Further, the Act does not seem to suggest that the Ugandan national must at the time of committing the offence be resident or living in Uganda. To this extent, this section must be read together with the global position on Mutual Legal Assistance in Anti-Money Laundering under part VI of the Act. What suffices to note here is that there may be some concerns as to whether this provision may not be abused for political purposes, especially in light of the facts that the offence of corruption is common in several countries on the African continent. One wonders therefore, whether the Act may not be applied selectively in order to either aid Ugandan nationals from being prosecuted elsewhere or aid foreign dignitaries who flee to Uganda to avoid prosecution elsewhere.

Money Laundering As a CrimeFor the first time in Ugandan criminal law, the AMLA criminalizes money laundering as an offence in its own right.18 As a white-collar offence, money laundering may not be the easiest to prove.19 To this extent therefore, the Act provides that the proving of intent and knowledge as well as the mental state at the time of committing the offence of money laundering may be inferred from objective factual circumstances. 20 In this respect, the Act draws from international conventions and offers a starting point in the prosecution of the offence of money laundering.

While the framing of this and other provisions in the Act may be laudable, it remains to be seen as to whether in the enforcement of the Act, the prosecution of persons under this law will be done consistently. It will also be critical that the enforcement of provisions includes not just individuals but also legal persons who practice money laundering. The wisdom of this approach lies in the fact that, where money laundering is itself a crime, it ensures that those who, because of the nature of their business, are liable to

18 In so doing, Uganda actually realized her obligation under Article 23 of the UNCAC as well as other international treaties, drawing from the first recommendation of the FATF which admonished states to criminalize laundering of the proceeds of corruption on the basis of the United Nations Convention against Illicit Traffic in Narcotic Drugs and psychotropic Substances, 1988 and the United Nations Convention against Transnational Organized Crime 2000.19 There have been instances elsewhere in which prosecuting authorities failed to prove the offence of money laundering even when it seemed apparent from surrounding circumstances and they have had to resort to proving predicate offences. A case in point is the prosecution of Al Capone in the United States, which in the end resulted in convicting him on Tax fraud and not money laundering.20 This test was applied in the case of the former Nigerian President, General Sani Abacha

PARLIAMENT WATCH UGANDAbecome involved in the laundering of the proceeds of corruption, are deterred from providing knowing assistance to those who wish to disguise the sources of their wealth. The inconsistency in the prosecution of corruption related offences in which billions of shillings have been lost from Ugandan government coffers is as familiar as it is deplorable. The privatization of government enterprises quickly comes to mind. A reading of the Hansard of Tuesday December 8th 1998 and a reflection of the selective prosecution that followed is telling.21 The tendency for selective prosecution continues to haunt Ugandan today, as a recent report of Human Rights Watch details.22

Obligations of Accountable PersonsThe Act imposes heavy obligations on Accountable Persons.23 The obligations here are divided into Customer Due Diligence obligations (which require a very detailed and cumulative list of Know Your Customer (KYC) standards). While KYC procedures are not new to the financial industry in Uganda, the Act now imposes more stringent reporting and monitoring obligation on all accountable persons. Specifically included in these obligations aremonitoring and reporting of suspicious transactions; reporting and monitoring continuing transactions; cross-border movement of currency and negotiable bearer instruments, availability of records (including the obligation to keep records in digital form); and electronic funds transfers.The Act also requires a blanket exclusion of confidentiality obligations except for the Attorney-client privilege in so far as it is protected by Ugandan law.Further, accountable persons must refrain from doing business with money launderers. Accountable persons must record and report all transactions whose value exceeds Uganda Shillings Twenty Million.24

The detail contained in this part of the Act is laudable. However, it is feared that these obligations may in the end turn out to be just as onerous. A discussion of some of the challenges in implementing these provisions will suffice.

Section 6 of the Act, which provides for the identification of clients and customers and other AML measures, broadens the scope and burden of Accountable Persons in identifying their clients. The section also requires

21 This Hansard details the afternoon sitting of the august House that day during which a Committee Report on the Privatization process was debated. Among the entities that were featured in that Report and debate were: UCB, Uganda Grain Milling Company Limited, Uganda Airlines, ENHAS, Hima Cement, et.cetera. Although the committee noted various individuals and companies that were involved in what was later to be admitted as wide spread corruption, only Dr. Sulaiman Kiggundu (RIP) was ever prosecuted successfully. The then DPP would later argue that this was due to lack of witnesses in the cases, which led to Gen. Salim Saleh offering to testify against Dr. Kiggundu22 See the 2013 Human Rights Watch Report: Letting the Big Fish Swim Failures to Prosecute High-Level Corruption in Uganda October 2013 ISBN: 978-1-62313-063323 A broad list of Accountable Persons is provided in the Second Schedule to the Act24 see Part III of the Act. These obligations are in tandem with Ugandas international obligations, such as under Article 14 UNCAC, which in its entirety is canvassed in the provisions of the Act.

PARLIAMENT WATCH UGANDAthat due diligence be undertaken on each client or customer before initiating a business relationship or carrying out an occasional transaction. Note that there are so many transactions that happen in the financial sense that literally give rise to a one-time occurrence of the business relationship. Requiring that these be subject to due diligence may not be practical not only because of their sheer number but also because of the potential time and cost implications of the due diligence process.

Further, if the client is acting on behalf of another person, the Accountable Person is required to identify that other person and to furnish proof of theirauthority to act on behalf of that other person. The whole essence of acting through another is sometimes due to the need for confidentiality or the impracticability of expeditiously executing a transaction in ones absence. Both of these objectives are defeated by the need to produce a lengthy laundry list of things that prove authenticity of the said delegated authority.

Also, while the wisdom behind this section is certainly worth noting, section 14(2) excludes its applicability to the Attorney-Client relationship (and rightly so!). Attorneys are then included in the Second Schedule among Accountable Persons. Attorneys are considered as gatekeepers who sometimes abuse their position of privilege to facilitate money laundering.There is likely therefore to be some confusion as to whether Attorneys are liable to disclose information relating to their clients or not.

The section then provides further due diligence measures: each Accountable Person is required to verify their customers identity using reliable, independent source documents, data or information such as passports, birth certificates, drivers licenses, identity cards, voters roll cards, utility bills, etc. Note here that most of these illustrative reliable independent source documents are originally procured from government institutions which are either largely dysfunctional or terribly bureaucratic. In essence, the Act requires that one must depend on these various institutions to be able to transact in the economy. In light of the fact that the larger part of our financial economy is informal and the emerging middle class comprises of recent graduates most of whom may not initially be captured in the various government systems; add to this the fact that forged birth certificates have been a common occurrence in Uganda, the practicability of this particular requirement may prove to be challenging to both the Accountable Persons and individual citizens.

Section 6 also requires that Accountable Persons conduct ongoing due diligence on the business relationship and scrutiny of transactions undertaken throughout in order to ensure that the transactions conducted are consistent with the Accountable Persons knowledge of the customer

PARLIAMENT WATCH UGANDAand their business, including, where necessary the source of funds. Thisprovision essentially makes every Accountable Person (as long as the list is) a spy on the entire population. It is also not clear who will meet the cost of this ongoing due diligence.

The Act contains fairly extraneous provisions on Politically Exposed Persons (PEPs). They will be subjected to higher due diligence measures, different risk management systems, their business relations will be monitored (the Act does not say how far this will go); the monitoring has to be ongoing; their sources of funds will have to be established; and they will not be able to establish a relationship with Accountable Persons except with the approval of senior management. The chances that this provision will be subjected to abuse in light of Ugandas political regime today are very high.25

These noted obligations are only a cursory summary of the obligations under section 6. To these are added obligations to: appoint a Money Laundering Control Officer; ensure that criminals or their associates do not hold or be beneficial owners of controlling interests or hold management functions; developing various internal policies; various additional due diligence measures relating to cross-border correspondent banking and similar relationships, et. cetera. In the end, the sensitization required for all these obligations to be met rigorously is not only too high but will also turn out to be costly.26 Further, although the Act requires the maintenance of Records, it is not clear if this provision requires Accountable Persons to maintain digital footage, which may be of critical evidential value in the prosecution of either AML or corruption cases.

A sum total of the above challenges in the enforcement of section 6 and the other provisions relating to the relationship between Accountable persons and their clientele leads to the conclusion that the enforcement of this Act is likely to increase the time and financial cost of transacting and procuring services (such as access to capital or loans and the cost of legal services); which in turn will hurt the economy more than it will help. One consideration is that the added cost of doing business is justifiable in the larger context of winning the war against corruption.

25 The view held by some (if not most); is that Uganda is slowly sliding into a period of less and less regard for tolerance of politically divergent views. This view is held by some who criticize the motive behind the enactment of the Public Order Management Act of 2013; among other recent laws viewed as politically motivated. See for instance: J. Oloka Onyango: Towards A New Kind Of Politics And Constitutionalism In (B)Uganda: Reflections On The Next Two Decades presented at the Buganda Conference (Ttabamiruka), on December 19, 2013; Busingye Kabumba, Constitutional delusions: Militarism and the Myth of Constitutionalism under Pax Musevenica, 27 September, 2012, accessed at: http://africlaw.com/2012/09/27/the-illusion-of-the-ugandan-constitution/26 This will especially be the case if Accountable Persons and their regulators choose to take the route that was taken by the Insurance Regulatory Authority. In order to train and sensitize stakeholders, Insurance Regulatory Authority requires that every Assured Person is required to pay a sum of Uganda shillings Twenty Thousand on any policy in addition to the Premium and Stamp Duty. This inevitably shifts the burden to the client and raises the cost of insurance.


Another foreseen challenge from the enforcement of Part III of the Act is the exclusion of the recording and reporting of suspicious transactions from various government offices and departments. Apart from Registrars of Companies and Registrars of Titles, other government departments are excepted from the applicability of the provisions of the Act under section 8(4) which provides that transactions conducted by accountable persons subject to supervision by authorities of the Government of Uganda are not required to be recorded on Form A. It will be noted that on many occasions, from the oldest instances of corruption to the most recent cases in Uganda, the involvement of a government official has been most pronounced.27

Also, it will be noted that the excepted transactions may actually include a variety of transactions by certain key players in the private sector. A transaction between two banks (both being supervised by the central bank) for instance need not be recorded. Neither would transactions between banks and telecommunication companies, as the Uganda Communications Commission regulates the latter. Form A would provide the very first premise upon which an enforcer of the AMLA would commence to gather evidence of laundering. As such, it is an important form for evidential and investigative purposes. There is a chance that the lack of this form in respect of transactions between cross-regulated parties will complicate evidence gathering and consequently, enforcement of the Act. While the Act provides that all licensing authorities are Accountable persons, only the Central Bank as a regulator has specific Anti Money Laundering Regulations. All the other licensing authorities have no framework within which they would capture these suspicious transactions.

As such, this subsection may leave a lot of room within which such players may remain unaccountable for very large transactions. In so doing, the law exposes entire sectoral systems or other institutional frameworks as possible nests for laundering operations. Such a loophole is especially troubling in light of two facts: firstly the world over, several banks have been penalized for indulging in illicit and money laundering transactions.28 Secondly, the

27 e.g. the 1966 Congo gold scandal, and the numerous scandals right from the less sophisticated days in which corruption cases were addressed by Presidential Pardon (see for instance Monica Nogara: Role of media in curbing corruption: the case of Uganda under President Yoweri K. Museveni during the no-party system, DESA Working Paper No. 72, 28 Bryant Ruiz Switzky: HSBC's $1.9 billion fine largest bank settlement in U.S. history, accessed on February 19 2014 at: http://www.bizjournals.com/washington/blog/2012/12/hsbc-fined-19-billion-largest-bank.html?page=all; Jill Treanor, Standard Chartered to pay $340m fine to New York bank regulator, accessed on February 19 2014 at:http://www.theguardian.com/business/2012/aug/14/standard-chartered-pay-fine-regulator, further see Elizabeth Warren Slams Federal Regulators Over Bank Money Laundering accessed on February 19 2014 at: http://www.motherjones.com/mojo/2013/03/elizabeth-warren-senate-banking-committee-hearing-money-laundering; Joel Rebello, RBI fines 22 banksRs.49.5 cr over money laundering, KYC normshttp://www.livemint.com/Industry/Fp0YJuPbRjFPJzEfCgMiIJ/RBI-penalizes-22-banks-for-violating-norms.html; US Government: FinCEN Penalizes New Jersey Community Bank for Risky Dealings with Foreign Money Exchanges accessed on February 19th 2014 at:

PARLIAMENT WATCH UGANDAintegration of financial services with telecommunications in Uganda through mobile money transactions has resulted in the exchange of monies outside the mainstream banking process that exceed the funds monitored in the conventional banking sector. The possibility of this framework being exploited to launder the proceeds of corruption with virtually no way of holding either the telecoms or the banks accountable is extremely concerning.

The Act is further lauded for targeting cross border movement of currency and negotiable bearer instruments. In so doing, the Act is understood to target diplomatic parcels and bearer bonds or non-cash instruments. The Act is not clear on how this provision is to be understood in the context of the Vienna Convention on Diplomatic Relations, 196129 under which such parcels are protected. So although the transactions anticipated in this section may be conducted through diplomatic avenues, there may be serious enforcement challenges that might hamper the fight against corruption.30

Section 11 of the Act that provides for the availability of records is unlike most provisions on access to information in Uganda. It provides that Accountable Persons shall avail information to courts, or other competent authorities for use in criminal, civil, administrative investigations, prosecutions or proceedings regarding crimes under the Act. Section 12 then guarantees the admissibility of such records, reports, notices or documents in a manner that requires a lower standard than is known under the Evidence Act.31

Two critical points must be noted here: firstly, from the wording of this Act, there is no direct requirement for a court order before accessing otherwise confidential information. It is possible that as a result, some government institutions may abuse the said provision.32 The potential for the abuse of this provision in light of the political climate in Uganda as, is earlier noted,33

is apparent. Secondly, this provision is lopsided in that it does not provide for access to this information being granted to private citizens. Given the perception that it is the citizenry that appears more concerned about corruption than the government, this is worrying. It may be deduced therefore, that while government agencies may not need a court order to

http://www.fincen.gov/news_room/nr/html/20130924.html 29 Vienna Convention on Diplomatic Relations Done at Vienna, on 24 April 1963 and domesticated vide Diplomatic Privileges Act, Cap 201, Laws of Uganda30 For a general discussion on the proceeds of corruption and diplomatic immunity, see: Kenneth K Mwenda (2011): Public International Law And The Regulation Of Diplomatic Immunity In The Fight Against Corruption, Pretoria University Law Press31 Compare section 12 here to sections 74, 101 and 102 of the Evidence Act, Cap 6 Laws of Uganda32 Compare this provision with Part V of the Act that requires court orders for Seizure, Freezing and Forfeiture of Assets. In other types of proceedings such as is the case elsewhere in the Act and in some other laws such as the Evidence (Bankers Books) Act, financial information cannot be obtained without a Court Order.33 see note 21 supra

PARLIAMENT WATCH UGANDAaccess otherwise private information, an individual seeking to commence a Private Prosecution or a corporation investigating internal fraud or money laundering or private sector corruption may require a court order nevertheless.34

The Act intends also to cover various forms of Electronic Funds Transfers including not just the traditional methods for such transfers such as banks and financial institutions but all other channels used by natural and legal persons to effect transfers. In this respect, however, the AMLA falls short on two accounts: firstly, it does not cross-reference the Electronic Transactions Act that contains various provisions that could be of parallel applicability.35

Secondly, the AMLA does not cover parallel banking systems. These include the more common Mobile Money in Uganda and M-Pesa in Kenya, which were initially used to reach the unbanked in rural communities.36 These systems have since mutated to draw in the more sophisticated members of society; and the transactional volumes on these systems are turning out to be higher than the entire banking sector. These mechanisms ought to be targeted because criminals in fact may abuse these systems. 37

Unfortunately, there is yet no clear way in the Act, through which the use of these avenues to launder the proceeds of corruption will be addressed.38

The foregoing discussion covers only some of the various obligations under the AMLA that Accountable Persons have to bear. To the extent that these obligations will be complied with, two conclusions are apparent: firstly, at best, the enforcement of this Act will be onerous and costly to the ordinary citizen. Secondly, in so far as the Act sought to put in place a most stringent regime against anti-money laundering, the framers of this Act carefully bypassed those avenues for independent scrutiny on government offices and departments that would have otherwise provided strong anti-corruption avenues.

The Financial Intelligence AuthorityThe AMLA provides for the creation of a specialized Authority much like

34 Uganda v. Shanita Namuyimba & Another CR. SC. 102 0f 2011 (High Court) is one example of what Lady Justice Bamugemereire referred to as private sector corruption, although it was prosecuted by the state, one cannot rule out the possibility of similar cases being initiated by private parties, especially as this is allowed under Ugandan law.35 See for instance part II of the Electronic Transactions Act, Act 8 of 2011, which for instance contains broad definitions and extensive provisions on the evidentiary value of electronic information. 36 Parallel banking refers to the informal channels often termed which are commonly used by ethnic communities and are often used outside the main domain of banking architecture. The system known as Hawala (in India) or Fie Chieu (in China) used typically by workers to transfer small amounts of money to relatives in villages lacking bank accounts or access to banks.36 Similar systems exist in Uganda, such as Dahabshili, which is most commonly used by the Somali community in Uganda to transfer funds to their relatives back home, are good examples.37 see Lambert, L (2002) Asian Underground Banking Scheme Journal of Contemporary Criminal Justice 18(4) pp. 358 369.38 It is noted that a law is in the offing to regulate mobile money transactions and one hopes that the framers of this law will bear the AML framework in mind.

PARLIAMENT WATCH UGANDAother regulators or implementing agencies, to whom all Accountable Persons are required to report. It is this Authority that is largely charged with the various duties through which government will ensure compliance with the Act. The Authoritys corporate governance structure is provided for alongwith mechanisms within which it should be held accountable. This Authority is also required to work with, and to the extent that it may, facilitate the work of various other government organs such as the Uganda Police and the courts of law. The Authority has its functions, powers and composition provided for by law, as well as its finances. Importantly, for all intents and purposes, this is Authority is expected to be an independent organization.

One of the greatest strengths of the AMLA is its protection of the identity of persons who provide information to the Authority. This is buttressed by the laws prohibition of the misuse of information obtained in the course of exercising the powers granted under the Act. These provisions would go a long way in motivating whistleblowers, who are key players in the fight against corruption.

However, a few concerns come to the fore. It is within the functions of this Authority to refer any matter derived from any report or information it receives to the appropriate law enforcement Agency in Uganda if, on the basis of its analysis and assessment, it has reasonable grounds to suspect that the transaction would be relevant to the investigation or prosecution of a money laundering or a serious offence.39 Some crucial terms in this subsection should have either been defined or their parameters provided for. Two such terms are: reasonable grounds and serious offence. In leaving these open ended, the framers of this Act left it open to very wide interpretation, unless of course, the ambiguity was purposively intended as a cover for the abuse of the Authoritys mandate. In any event, the ambiguity left the actions of the Authority open to legal challenge, which in the case of prosecution of corruption cases, given the long abiding problem of court backlog, would at the very least, delay convictions or other decisive action such as seizure of tainted property.

In stipulating the functions of the Authority, the wording of the Act seems to highlight the nexus between the offences of money laundering and terrorism financing, but conspicuously omits the offence of corruption.40 While this may be based on the global background of the AML regime,41 one would have expected a Ugandan law on the subject to focus on the more rampant vice of corruption. The possibly resultant weakness from this purposeful ambiguity

39 See section 20 (1) (b)40 see for instance, section12 (b) and (n)41 It is noted here that the present global AML regime arose from the need to address tax evasion and the proceeds of drug trafficking to now addressing terrorist financing and the need to ensure the integrity of the financial system.

PARLIAMENT WATCH UGANDAis that in enforcing this Act, the Authority may choose to focus on money laundering as an independent offence or terrorism financing. Instead of adding corruption to the continuum as a major vice to be addressed through this Act, the Act will likely be enforced in spite of any corruption related activity.

Under section 21 (b), the Act empowers the Authority to assign employees and seconded personnel to particular posts within the Authority. It is not clear why, in light of specific provisions on the appointment of its staff, the Authority was given specific powers to assign employees and seconded personnel to these so called particular positions. Who seconds these personnel? What are the criteria for determining these particular posts within the Authority? These questions remain unanswered. What comes to the fore, however, is that in light of the concerns on the rampancy of nepotism (which in itself is a sign of corruption) in Uganda, this power is likely to be abused.42

Like most of the other Authorities or governing organs of government parastatals, it remains to be seen how independent the Board appointed by the Minister responsible for Finance, Planning and Economic Development will be in managing the affairs of the Authority. There have, on occasion, been allegations of political interference in the work of such Boards of Directors.43

The Act provides quite positively for the Executive Director to be appointed on a four-year term and only be eligible for renewal for one more term. This is a good provision in the sense that it could help avoid patronage. However, in providing that the Minister can remove the Executive Director on recommendation of the Board for: misconduct, incapacity or incompetence,the Act may create more problems than it solves. Given the sensitive nature that the position of Executive Director is likely to be, 44 a process that involves a more transparent mechanism would, for instance, have been more appropriate.45 At the very minimum, a procedure for the removal of this

42 For a discussion on the corruption nepotism nexus and its place in Ugandas fight against corruption, see: Raphael Baku: Fighting Corruption is the Responsibility of Every Ugandan, in The Investigator (a News Letter of the Inspectorate of Government of Uganda) pp. 1,3 and JJ Rwereeza: Highlights of National Integrity Survey 2008 in The Investigator (a News Letter of the Inspectorate of Government of Uganda) at P.12 43 See for instance: Jamwa David Chandi: Jamwa Exposes Suruma, Nzeyi Trickery http://testindependentcoug.com/index.php/reports/special-report/585-nssf-jamwa-exposes-suruma-nzeyi-trickery44 The need for security of tenure for the ED is critical in light of their intended role especially if they are to focus on the fight against corruption, or to address the laundering of illicitly obtained funds, and in light of the larger implications of their work on the tax base, the potential clash with the Executive Arm of Government to which this Executive Director will not directly report nor account, their involvement in the recovery of tainted property and such other sensitive assignments, the removal process should have been more stringent.45 Such as the establishment of an independent Tribunal as is the case for the removal of the lord mayor of Kampala Capital City Authority under section 12 of the KCC Act of 2011.

PARLIAMENT WATCH UGANDAExecutive Director should have involved either the general public through their elected leaders (to whom the Authority accounts), or some independent body of third parties.

Also, although the use of terms such as incompetence, misconduct or incapacity seems to be taking root in recent Ugandan legislation, these terms have not been tested at the courts in the context of Administrative Law. Until the jurisprudence is settled, there may be challenges in avoiding their use to achieve politically motivated aims.46 At the very minimum, a set of Regulations that defines these grounds more clearly and stipulates a multi tiered approach to the determination of how to invoke the grounds for the Executive Directors removal should be enacted to avoid the various unfriendly scenarios that may occur, including protracted litigation and paralysis or the undermining of the institutions integrity as a result of internal management issues or political or other external influence.

Recovering the Proceeds of CorruptionAs with any international AML law, one of the main aims of the AMLA is to provide for processes that can be utilized to identify and confiscate the proceeds of crime. A pre-requisite for AML law to contribute to the fight against corruption is that the corrupt activity needs to be defined as a criminal activity for the purposes of the jurisdiction(s) involved. Also critical is the fact that while the law seeks to identify and recover the proceeds of crime, for confiscation of the proceeds of crime under the AMLA (as is the accepted position in many international spheres) a prior criminal conviction is not required.47

Part V of the Act contains an elaborate procedure for civil forfeiture/confiscation of tainted property in its sections 83 to 91. This part of the Act must be read together with section 5(b) which separates AML proceedings from corruption or other criminal offences. By providing for the absolute loss of property whether movable or immovable, the Act offers great promise in the fight against corruption in Uganda. The provisions of this part of the Act not only meet the minimal standards of a good AML regime, but also rest well within the intersection of AML and Ugandas international obligations in the fight against corruption in that in addition to having earlier criminalized money laundering, it provides for mechanisms within

46 see for instance the section 12 (5) of the KCC Act that provides for the grounds for the removal of the lord mayor of the Kampala Capital City and, among other grounds uses the words: Incompetence and misconduct or misbehavior these terms are now the subject of what may turn out to be protracted litigation in the various cases all similarly cited as Lukwago Erias v. the Attorney General & Another that are ongoing at the time of writing. It may therefore, be a while, before the dust settles on the meaning and scope of these terms in Ugandan law. In the meantime, the only known yardstick is that set in the discussion of standard of proof in the Report of the Tribunal Investigating the Removal of the Lord Mayor of Kampala Capital City (2013). Even then, a good crossection of the public believes that the Tribunal was only appointed as a legal means to achieve a political end.47 See Indira Carr & Miriam Goldby supray note 13

PARLIAMENT WATCH UGANDAwhich Articles 15-22 of the UNCAC may be met.

This is of great potential significance in a corruption case, where obtaining a conviction may be problematic for various reasons: for example the corrupt person may be deemed as too influential (such as Jim Muhwezi and Sam Kutesa, who were actually censured by Parliament on accusations of corruption, but were never investigated or prosecuted).48 Some individuals may be shielded by the President (as in the case of Gen. Salim Saleh, who received presidential pardons), have public immunity by virtue of his office (examples here include judges or the President), the judiciary may be corrupt; or there may be practical difficulties involving gathering of evidence and proof against judicial officers (such as is the case with Ugandan judges). In addition, where the trial does take place, it is more than likely to be significantly delayed because of the complexities of the case as well as the tactics of the defendants legal representatives. The delays may be such as to permit the proceeds of the corrupt activity to be dispersed or lost in the meantime. By making a prior conviction unnecessary, AML procedures can be beneficial in ensuring that the freezing of assets is not delayed while waiting for the result of a criminal trial, thus minimizing the risk that the perpetrator has time to arrange their concealment while awaiting trial or sentence.49

Also and more importantly, repatriation of stolen monies makes available additional resources for development activities.50 So recovery is possible even in the case of death (such as was the case with Sani Abacha) where a conviction for corruption may be unattainable. Recovery of resources is also possible on the vacation of power and loss of immunity, where prosecution for corruption may be barred by the ban of applicability of retrospective legislation (as in the case of Ugandans who have illicitly amassed wealth), because of a robust AML regime.

Four concerns, however, come to the fore: firstly, this part of the Act provides for some judicial processes to be heard in the absence of the person

48 Suffice to say these two individuals would later be charged with corruption related offences arising from entirely different sets of facts from what led to their censure.49 Generally see Indira Carr & Miriam Goldby at note 13 but with additional illustrations by author50 Generally see Indira Carr & Miriam Goldby at note 13 but also see the Gen. Abacha case as discussed in Daniel, and Maton, J (2008) Recovering the Proceeds of Corruption: General Sani Abacha a nations thief, in Pieth, M. (ed.) Recovering Stolen Assets, Bern: Peter Lang, pp 64 78.; two chapters of Peter Langs work are also available at: http://www.edwardswildman.com/files/News/13fd401f-8237-4372-b0c1-3cb439addcb1/Presentation/NewsAttachment/d7bdc63e-5a1a-4439-b4e7-6832a96519ea/Basel%20Institute%20Recovering%20stolen%20assets%20-%20February%202008.pdfaccessed on January 21, 2014 and more extensively, Ignasio Jimu (2009): Managing Proceeds of Asset Recovery: The Case of Nigeria, Peru, the Philippines and Kazakhstan International Centre for Asset Recovery Working Paper no. 06 accessed at http://www.baselgovernance.org/fileadmin/docs/publications/working_papers/Managing_Prodceeds_of_AR_Final.pdf on January 21, 2014

PARLIAMENT WATCH UGANDAagainst whom the proceedings would be brought.51 Ugandan courts have recently decried ex parte procedures, as there is now a general view in the judiciary that at the very least, the other party deserves to test the merits of any application brought against them.52 Secondly, any relevance that this part of the Act may have towards the fight against corruption is largely dependent on the political will of the government in charge and to some extent, the functionality and proper coordination of various government agencies.53 These two factors are among the leading factors believed to be hampering the fight against corruption in Uganda today.54

Thirdly, unlike the Kenyan legislation, the AMLA does not provide for an Asset Recovery Unit or agency. Instead, the Act provides that court may be moved by an Authorized person to make an order for recovery.55 There have been instances where similar Orders are made under the Anti Corruption Act but no action has been taken. Providing for a Unit or Agency whose mandate it would have been to take such actions would have avoided a similar weakness. Sadly, this is one of the most glaring departures of Ugandan Act from the Kenyan law. As members of a regional bloc, it is important that the laws and enforcement mechanisms be harmonized.

Finally, at the time of writing this paper, attempts are underway to amend the Anti-corruption Act.56 The intentions of the proposed amendments are centered on the recovery of the proceeds of corruption. These intended amendments seek to achieve two broad objectives: improve and safeguard the investigation processes related to the prosecution of corruption as an offence; and fill the lacunas left in the Anti-corruption Act with respect to asset recovery. Regarding the former, the Bill seeks to harness powers of investigators and buttress the various actions of the police in the course of the investigations. With respect to the latter, it is proposed that all property be vested in the Public Trustee appointed under the Public Trustees Act.57

This approach is prone to its own challenges that might even be worse than 51 Such as Applications for Orders such as a Production Order on suspicion of possession of documents or other material disclosing the location of tainted property and a Monitoring Order directing a Financial Institution to give information to an Authorized person.52 see for instance Zehurikize Js decision in Hussein Bada v. Iganga DLB & 9 Others Misc. Application No. 479/2011 but see also Yasin Nyanzi J. in Lukwago Erias v. AG and Another Misc. Application NO. 445 OF 2013 where the judge adds to the exceptions created by Zehurikize J. in Hussein Bada v. Iganga DLB and Others. It is noted here, however, that the wording of the AMLA would not fall within any of the intended scenarios that are captured in section 44 and Part V thereof.53 See Daniel and Maton and Ignasio Jimu op.cit note 1754 See 2013 Human Rights Watch Report: Letting the Big Fish Swim Failures to Prosecute High-Level Corruption in Uganda October 2013 ISBN: 978-1-62313-063355 See section 98 of the AMLA and compare this with part VI of the Kenyan Proceeds of Crime and Anti-Money Laundering Act, 2009. In fact, a further comparison of part V of the Ugandan and part VII of the Kenyan statutes shows that Ugandan legislation should have been more detailed in the distinction between civil and criminal forfeiture. See for instance part and VII of the Kenyan 56 See the Anti-corruption Amendment Bill, Bill 7 of 2013. Let the reader remember, however, that this Bill is by no means the final text of what the amendment Act might present. It is possible therefore, that some concerns raised in this paper may be addressed by the time the Bill passes into law.57 Public Trustees Act, Cap 161 Laws of Uganda

PARLIAMENT WATCH UGANDAthe challenges discussed in this paper with regard to the AMLA. The Public Trustee in Uganda is a corporation sole. Ideally, the office of the Public Trustee is an office occupied by a single government officer, who has exclusive control on a substantial amount of assets. His work is rather opaque from the general public and on whom there is hardly every any accountability In light of the fact that the proceeds of corruption often involve large sums of money, it may not be wise to subject funds pilfered from government sources to another single government office with hardly any stringent monitoring mechanisms.

There seems to be no evidence that the Anti-corruption Amendment Bill of 2013 considered the provisions of the AMLA. Firstly, while the AMLA regime focuses on politically exposed persons, whom by nature and definition may apply to opposition politicians, the Anti-corruption Amendment Bill focuses on political leaders, who are defined therein as being employed or appointed to hold a political office. This does not include aspirants for political office. Also, the Anti-corruption Amendment Bill creates a totally different and parallel enforcement mechanism with regard to the proceeds of corruption. It also seems to harness investigative powers in ways that are totally different from the means provided in the AMLA. It has already been argued that there is an apparent nexus between corruption and money laundering. 58 One wonders, therefore, why the two regimes are being developed in exclusivity of each other. In the result, this is likely to worsen the already existing challenge of overlapping and intertwined mandates in the fight against corruption, which overlaps have already been identified elsewhere as a major drawback in the fight against corruption.59

International Cooperation/Mutual Legal AssistanceThe fight against money laundering has become global with procedures now developed for collaboration between different states. The worldwide AML network is now vital in making a significant contribution in locating assets that may include the proceeds of corruption. Areas of collaboration includerecord keeping and access, enforcement of judgments and imposition of sanctions, execution of procedures such as extradition and other areas of mutual legal assistance.60 Within the global AML regime, the fight against corruption is likely to have both a criminal and civil dimension and as a result, Uganda stands to benefit from experiences elsewhere, especially in the future, as the AML regime grows more robust, or when political will to recover illicit finances gains momentum.

58 op.cit notes 7 and 8 above59 For a thorough discussion of this point, see 2013 Human Rights Watch Report: Letting the Big Fish Swim Failures to Prosecute High-Level Corruption in Uganda October 2013 ISBN: 978-1-62313-0633.60 op.cit Indira Carr and Miriam Goldby at note 13.

PARLIAMENT WATCH UGANDAOn its part, the Act provides for various areas of mutual assistance between states, and empowers the Minister or any authorized officer to enter into agreements with any ministry, department, public body outside Uganda for the collection, use or disclosure of information for the purpose of exchanging or sharing information outside Uganda or any other purpose; and to make requests for mutual legal assistance. The Act further requires in mandatory terms that courts and competent authorities in Uganda comply with courts or other competent authorities in other states in taking the appropriate measures concerning money laundering and other organized crime. The Act does provide the parameters within which requests for Mutual Legal Assistance may be granted or declined and these are crucial and well within the sovereign rights of the Ugandan state. In furtherance of the commitment to fight money laundering, the Act provides that final judgments and court orders will be treated as evidence that the property so named therein shall be eligible for confiscation and the procedure to be followed in the event of receipt of a request for confiscation is also stipulated.

The question of extradition is one that is also quite extensively covered in the Act. The Act provides for both the grounds on which extradition shall be allowed and the ones on which it shall be declined. Interestingly, it is specifically provided that extradition shall only be carried out if the crime for which it is sought is punishable under the laws of both Uganda and the requesting state. It must be emphasized that any of the various offences related to the offence of money laundering are extraditable under this Act. It must also be noted that even if the offence may not be punishable under the laws of the requesting state, a reading of section 2 on jurisdiction still makes the offence punishable in Uganda if it was committed either by a Ugandan citizen while such a person was outside Uganda or by a non Ugandan who may have been in Uganda at the time the offence was committed. As to whether this provision will be more beneficial than not will depend entirely on the political will to prosecute the attendant offences. While on the one hand the provision may hold liable persons to account whether they are executed or not, on the other hand, there might be no recourse where the relevant authorities decline to act.

Two of the various grounds on which extradition may be declined stand out: firstly, extradition may be declined where the extradition of the person in question would be incompatible with humanitarian considerations in view of the age, health or other personal circumstances of that person.61 Secondly, the Act also provides that Uganda may, when it deems appropriate, provide assistance to the extent that it decides at its discretion, irrespective of whether the conduct would constitute a crime under the laws of Uganda.62

61 Section 13 (6) (i)62 section 114 (14)

PARLIAMENT WATCH UGANDAOne wonders whether these two provisions may not be abused by corrupt ministers clothed with such broad powers to trade in shelter for fellow corrupt persons from other jurisdictions. This is especially so when these two clauses are read together with the provision that allows Uganda to decline mutual legal assistance on grounds of absence of dual criminality.63

A major weakness in this part of the Act is in the wording of section 108, which provides for Judgments from other jurisdictions being used as evidence. Rather than being enforced on a reciprocal basis, final judgments providing for confiscation of property connected to money laundering or other crimes may be recognized by a Ugandan court as evidence that the property referred to by such an order or judgment may be subject to confiscation with the laws of Uganda. From its wording, this provision necessitates additional procedural steps as set out in section 109, before the judgment or order may be enforced in Uganda. This then brings into play all the vagaries of litigation, some of which have been discussed above. A better approach would have been to couch this provision in more stringent terms and provide that a court may register and enforce a confiscation order of the requesting state and treat it as if a Ugandan court had rendered the judgment or Order. Understandably, one might have needed to seek redress regarding the Order or judgment but then the finality of the matter would have to be determined in the country where the Order was made, other than opening the matter up for further litigation and possible interpretation or formal proof.

Rhetoric or Reality?The framers of the AMLA seem to have had in mind the various methods used to launder the proceeds of corruption.64 The commonest five are: (i) the use of corporate vehicles and trusts; (ii) the use and role of gatekeepers; (iii) the use of domestic financial institutions; (iv) the use of offshore/foreign jurisdictions; (v) the use of nominees and the use of cash. This view is based on the stringent nature of obligations imposed on Accountable Persons. This effort is commendable. But these stringent obligations are redundant if they cannot effectively tackle the key vulnerabilities in the system.

The framers further seemed to have been aware of the vulnerabilities that lead to an increased risk of the laundering of proceeds.65 These are: (i) the possession of firm control over the state by those culpable in corruption; (ii) financial institutions capture (where financial institutions are compromised by criminal elements, which then launder money with impunity); (iii)

63 section 114 (13)64 for a thorough discussion of these methods and the various vulnerabilities discussed hereunder, see FATF: Laundering the Proceeds of Corruption (July 2011)65 ibid

PARLIAMENT WATCH UGANDAineffective enhanced due diligence; and (iv) ineffective communications among states and financial institutions.

However, one cannot help but notice that there are various key provisions in the Act that leave room for manipulation in such a way that these vulnerabilities are exploited. Examples include the careful wording of the provision on jurisdiction; the provision on the enforcement of judgments; as well as the role of regulators and supervising government agencies. Also, the framers of the statute could have been bolder in their emphasis on corruption as a vice affiliated with money laundering. But they did not. To make the AMLA a more robust tool in supporting the fight against corruption, this analysis proposes some key recommendations.

The Big Picture: What Are The Broader Implications?

Political Implications:The AMLA is part of a growing body of legislation that puts those with divergent political views at risk of falling foul of the state. Other legislation that potentially threatens those with divergent views includes the Public Order Management Act; Uganda Communications Act; and the proposed amendment to remove bail for capital offences.

For example, the Public Order Management Act subjects anyone holding public meetings or gatherings to the discretion of the police, in terms of whether such meetings or gathering can be held. Enforcement of the Public Order Management Act is likely to target political rivals of the ruling establishment, and therefore limit political expression by those with divergent views from the establishment.

The Uganda Communications Act, likewise, provides the Uganda Communications Commission with broad powers to restrict the content of broadcasting, where restrictions include anything contrary to public morality or including distortion of facts. The UCA has already been invoked by the UCC in a warning letter to broadcasters on coverage of Ugandas role in South Sudan. Such broad regulatory powers can be used to curtail the freedom of expression of political opponents, as has been the case on politically divergent views on South Sudan, and during the 2011 elections, where UCC restricted the oppositions access to the media.

An amendment proposing the denial of bail also does not augur well for political rights; there have already been cases of the use of trumped up charges by the authorities against those they consider dangerous to the state. Such an amendment would make it easy for

PARLIAMENT WATCH UGANDAincarceration of political opponents of the state by overzealous members of the ruling establishment, on politically motivated charges.

The AMLA provides similar opportunities for harassment of political opponents. By subjecting politically exposed persons to higher levels of scrutiny and providing the authorities with the opportunity to freeze their assets, it opens up the possibility for the government to curtail the resources of those it sees as political rivals, especially as campaign time approaches.

Governance Implications:

The AMLA has significant potential as a tool for promoting better governance, especially in terms of tracking expenditure patterns andensuring that public resources are not wasted. This is because it offers a new tool for following the money that can help establish the source of the supply of funds that are laundered and re-emerge as legitimate funds elsewhere in the economy. The AMLAs ability to trace funds internationally through cooperation across borders helps track financial flows out of the country. With such a tool, and the political will to enforce it, tracking government expenditure and the misuse of public resources could become considerably easier.

Such a follow the money type approach would be very helpful for the Ugandan case where many illicit financial flows originate from grand corruption at top levels of government. Being able to trace the supply of such funds could help sidestep the challenge that Uganda has so far faced in prosecuting the big fish of corruption scandals, as detailed by a recent Human Rights Watch report. It should also help the work of other anti-corruption agencies that might face difficulty in accessing the information needed to develop a complete case against the corrupt and prosecute that case to its conclusion.

The considerable loopholes remaining in the law, however, including the exclusion of the recording and reporting of suspicious transaction from various government offices and departments, will make actually using the Act to stop the leakage of public resources problematic. The exclusion of transactions between two bankswhich are only supervised the Central Bankand between banks and telecommunications companiesregulated by the Uganda Communications Commissionwill make the tracing of the leakage of public resources even more challenging. The creation of such sectors where money laundering may be concealed will leave critical gaps in the framework to be exploited by corrupt officials to hide very large transactions.

Implications for the Battle Against Corruption


The battle against corruption in Uganda has witnessed the rise of numerous institutions charged with combatting corruption and the incorporation of other institutions, organizations such as the Inspector General of Government; the Office of the Auditor General; the Directorate of Public Prosecutions; the Anti-Corruption Court; the Public Accounts Committee of Parliament; and others. Yet little progress has been made in reducing corruption in Uganda, despite the existence of these institutions. With the additional institutional framework provided by the Anti-Money Laundering Act, and the proposed framework under the Anti-Corruption Amendment Bill, can these new institutions help bridge the gaps that have made securing high level convictions of the corrupt difficult?

As this paper has explained, the AMLA does provide new tools that could be very valuable in tracing corruption in ways that have so far been largely unexplored. Likewise, the Anti-Corruption Amendment Bill could make the freezing of assets and the recovery of money lost to corruption easier if political will is behind it. Therefore, the new legislation provides some very positive avenues for tracing and recovering government resources lost to corruption.

Yet increasing the number of institutions and processes for tracing the procedures of corruption may also create a confusing array of authorities working in parallel or in disregard of each other. The ability of these organizations to support each other and coordinate their efforts in the fight against corruption has been limited at best to this point. Passing the AMLA and the new Anti-Corruption Amendment Bill, which create two new unrelated further procedures for combating corruption may simply exacerbate the existing problem of lack of coordination between the different groups responsible.

Instead of introducing more institutions to fight corruption, better coordination of existing anti-corruption bodies and political will to enforce laws and prosecute powerful offenders would make a greater impact. When existing institutions have not delivered, such as in the case of the IGGs inability to fulfil its constitutional mandate to enforce the Leadership Code of Conduct, and thereby make public declarations of the wealth of Ugandas leaders, this has led to limited progress in the struggle against corruption, and lack of public confidence in the governments commitment to reduce this vice.


ConclusionThis paper takes the considered position that a significant number of the provisions of the AMLA are as well intentioned as they are detailed. However, the relevance of the AMLA in the fight corruption will depend entirely on the will of those in charge of implementing the Act. It has already been established elsewhere that Ugandas problem is the lack of coordination among government agencies. This fact has been identified as the main cause for sloth in the fight against corruption.66 No matter how well the Act is interpreted and analyzed, in the end, the success of this law or its being fine tuned so as to contribute even more meaningfully to fighting corruption rests on the will of the concerned offices. In posterity, this success will be measured by what lengths the various institutions and individuals will go to achieve the AMLAs goals. Should there be no political will to see the stringent implementation of this Act, the statute will remain just one other of the statutes with anti-corruption rhetoric. Implementing the Act will squarely will leave culprits with the unfriendly realities of a financially sober world, while the small and often ignored minority will celebrate these realities as the redemptive movements of time.

Key Recommendations The AMLA will only be relevant to the extent that it is actually

enforced. It is recommended therefore that:(c) the necessary Regulations, which hopefully will contain the

necessary forms be enacted sooner rather than later; and(d) the Financial Intelligence Authority be put in place as soon as

possible.67

This paper has pointed out areas in which the AMLA should have cross-referenced other legislation (such as the Electronic Transactions Act). These need to be studied further and appropriate action taken in a bid to achieve harmonization of the entire legal framework.

Specifically, it is important to harmonize the AMLA with the other body of Anti Corruption legislation in various areas. Enforcement in areas such as investigation and Asset Recovery (under the AMLA) and similar orders under the Anti Corruption Act, should be synchronized.

66 Letting the Big Fish Swim, supra67 It is important to avoid a scenario such as the one with the KCC Act of 2011, which provided for the appointment of a Metropolitan Physical Planning Authority, which has not been put in place almost three years after the enactment of the law, notwithstanding the fact that names were forwarded to the line minister over two years ago.

PARLIAMENT WATCH UGANDA Various loopholes that have been pointed out in this paper need to be

addressed either by way of substantive regulations or by amendment of the Act. Some of the areas are:(f) A more definitive framework on evidence gathering on vessels

flying the Uganda flag; (g) Amending the provision on jurisdiction to provide for vessels

destined for Uganda;(h) the effect of section 8(4) on who must keep records of Form A;(i) in order to address the lacuna in section 8(4), it will also be critical

to amend the Second Schedule to provide for government institutions instead of Licensing Authorities;

(j) Defining key terms around the roles of the Financial Intelligence Authority (such as the terms in sections 20(1)(b) and 21(1)(b) as discussed above; and

(k) Redefining the process for the dismissal of the Executive Director and the attendant terms.

It is important to consider the need for an independent Asset Recovery Unit/Agency to enforce the provisions on confiscation and recovery. This need not be a totally new organization. The Kenyan legislation for instance provides for an institution comprised of persons from within an already existing government framework.

It is troubling to see that there are efforts to amend the Anti-corruption Act that have not taken into account the AMLA. Because of the symbiosis between corruption and money laundering, there ougt to be a synchronized enforcement mechanism with regard to asset recovery and evidence gathering. But legislative approaches seem to be divergent. To this extent, there is also need to adopt a convergence strategy towards the AML and the anticorruption crusades in Uganda.

Relatedly, it is important to explore and reconcile all the areas of departure from similar legislation in the region, especially in light of the fact that as an East African Community, harmonization of both laws and their enforcement is critical.

It may be necessary to amend the law to provide for judgments being enforceable once they are final in the jurisdiction from which they arise, in stead of them having evidentiary effect and value in Uganda.

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Bardhan, P.: Corruption and Development: A Review of Issues,Journal of Economic Literature, 35(3)

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Indira Carr & Miriam Goldby: The UN Anti-Corruption Convention And Money Laundering

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Legislation Anti-Corruption Act, Act 6 of 2009

Anti-Money Laundering Act, 2013

Electronic Transactions Act, Act 8 of 2011

Evidence Act, Cap 6 Laws of Uganda

Evidence (Bankers Books) Act

Financial Institutions Act, 2004

Financial Institutions (Anti-Money Laundering) Regulations, SI 46 of 2010

Kampala Capital City Act of 2011

Proceeds of Crime and Anti-Money Laundering Act, 2009 (Kenyan)

Public Order Management Act of 2013

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PARLIAMENT WATCH UGANDA Anti-corruption Amendment Bill, Bill 7 of 2013

Court Decisions Hussein Bada v. Iganga DLB & 9 Others Misc. Application No.

479/2011 (Zehurikize J)

Lukwago Erias v. the Attorney General & Another

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United Nations Convention Against Transnational Organized Crimeadopted by General Assembly resolution 55/25 of 15 November 2000

Vienna Convention on Diplomatic Relations Done at Vienna, on 24 April 1963 and domesticated vide Diplomatic Privileges Act, Cap 201, Laws of Uganda

United Nations Security Council Resolution 1267

United Nations Security Council Resolution 1373.

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