Money laundering, corruption hurts ordinary Ugandans and Covid-19 restrictions have fueled cybercrime as people increasingly turn to digital technology to manage their finances, warns senior anti-government official Corruption.
Money laundering has potentially devastated Uganda’s economic, security and social situation. Money laundering provides the fuel for drug traffickers, terrorists, illegal arms traffickers, corrupt public officials and others to operate and expand their criminal enterprises.
Money laundering is the concealment of money illegally obtained through transfers involving foreign banks or legitimate businesses.
Crime has become increasingly international and the financial aspects of crime have become more complex due to rapid advances in technology and the globalization of the financial services industry.
In an interview with Sydney Asubo, executive director of the Financial Intelligence Authority (FIA), a body formed to fight money laundering and terrorist financing, he said that money laundering had contributed to the tax reduction.
âThanks to money laundering, money is transferred from Uganda to other countries. The result is that companies have less profit to earn and therefore less tax to pay, âhe said.
Asubo added that money laundering has contributed to the country’s reputation risk.
“Credible investors will not want to be involved in a country with money laundering risks, as this would create mistrust of their investments,” he noted.
Adding: “The launderers illegally invest their income to become legitimate, they are ready to pay for their purchases more than their real value, this leads to an imbalance of prices by an artificial increase in prices. Money launderers engage in large purchases, due to the greater availability of funds. To hide their illicit funds, money launderers are able to pay much more than the real value of the property, causing purchases to flow artificially, making them unaffordable for honest buyers.
He further revealed that sometimes money launderers take over the judicial system.
“These mafias will give bribes to public officials in order to take control of the judiciary, leading to an increase in the high rates of human and drug trafficking, prostitution and smuggling of all kinds of goods. “said Asubo.
Asubo noted that cybercrime has become a scourge during the Covid-19 pandemic season since the public embraced the digital medium of communication to prevent the spread of the virus.
âMany financial institutions like banks that promote online banking have been victims of cybercrime. Criminals have personal contact with their potential victims as they use computer viruses and other illegal devices to access databases, bank accounts. Theft of payment card data (bank account) or online banking access codes to steal funds from bank customers, theft of personal data or business information from personal computers or servers, intentional damage information systems or communication equipment to inflict losses on businesses, the exhaustive list of money laundering threats are associated with the explosive development of modern information technologies, âhe revealed.
In a statement issued by the FIA ââon April 8, 2020, financial institutions were urged, under the anti-money laundering law, to remain vigilant in the event of malicious or fraudulent transactions.
He added that the law still lags behind the technology used by criminals.
âIn Uganda, the perpetrators are insiders who designed these systems for the banks, so they know how to manipulate them at all times. In cases where there is more crime, the higher the chances of catching the criminals, âadded Asubo.
Kyambadde Andrew, tax lawyer, noted that the government lacks the financial capacity to tackle the problem of money laundering.
âThe problem is that the money launderers are high-ranking individuals, so investigators will have to incur a lot of costs to fund their investigations. Money laundering also contributes to corruption, as money is illegally moved out of Uganda and dirty money is often left clean. The money obtained through corrupt means, crime and tax evasion, ultimately exiting Uganda, has been estimated at 7.3 billion US dollars (18 trillion Shs) over a ten-year period (from 2001 to 2011), âhe said.
Dixon Kagurusi Ampumuza, researcher in international relations and diplomacy at Makerere University, noted that money laundering compromises the enjoyment of fundamental rights, freedoms and more particularly, the progressive realization of economic, social and cultural rights.
âMoney laundering also severely limits Uganda’s ability to meet the Sustainable Development Goals (SDGs) ahead of the COVID 19 outbreak. Additionally, by committing illicit financial flows, multinational corporations are profiting from a sleight of hand as small and medium-sized enterprises (SMEs) bear the brunt of the tax burden, âhe said.
Ampumuza added that Uganda’s informal cash-based economy provides a fertile environment for money laundering as its lack of intellectual property rights legislation fuels a large black market for smuggled goods and / or counterfeit.
âCurrently, most of the money laundered comes from domestic products, much of which comes from uncontrolled corruption. Failure to monitor formal and informal financial transactions like informal commerce along porous borders could make the country vulnerable to potential terrorist financing. Thus, many institutional policy recommendations should be made in order to address the difficult effects of money laundering in Uganda, âhe said.
However, Uganda continues to lose at least US $ 1 billion (over Shs 3.69 trillion) in revenue each year due to Illicit Financial Flows (IFFs), corruption and money laundering activities. , as indicated in the Global Financial Integrity (GFI) 2018 report.
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