“Do not be misled: “Bad company corrupts good character.”
1 Corinthians 15:33
The Anti Terrorism (Amendment) Bill 2015 is one of the shortest bills presented to Parliament in the last ten years. The Bill is only six clauses long and is written in fairly plain text. It seeks to amend the principal Act by including and improving definitions, revisiting sanctions, and introducing legislative measures against the financing of terrorism. The Bill criminalizes the financing of terrorism and the related ways and means in which funds can be deployed for terrorist purposes.
As short as it is, this Bill not only provides the legislative premise for Police intervention but also provides the mechanisms and consequences of liability for engaging in terrorist financing. Therefore, although the Bill principally amends the Anti Terrorism Act of 2002, it also compliments and should be read together with the Anti Money Laundering Act (AMLA) of 2013. While the AMLA provided a comprehensive framework for money laundering, it did not address the counterpart concern of Combating Terrorist Financing. This is one of the main gaps that the Anti Terrorism Amendment Bill will fill. And this is why it is important that this Bill passes as soon as possible.
At the domestic level, combating money laundering will take the concerted efforts of several institutions including the Uganda Police, the Central Bank, the Uganda Revenue Authority, commercial banks and other various key players. At the lead of this process will be the Financial Institutions Authority (FIA). But the FIA has to work with the East and Southern Africa Anti Money Laundering Group (ESAAMLG) and the Financial Action Task Force. It is these two bodies that set the pace for anti money laundering initiatives at the regional and global levels respectively.
These bodies set recommendations and admonish countries to cooperate in working towards a world without money laundering. As part of this process, FATF regularly issues Public Statements by which it indicates which countries are making progress and at what stages of cooperation the countries are. Those countries that are perceived as being least phased by the need to combat money laundering are placed on FATF’s list of Non Cooperative Countries or Territories (NCCT) or what is now referred to in AML parlance as the FATF Blacklist. In order to ensure that countries are not unfairly categorized, FATF and ESAAMLG will work with the member state to create an action plan which once followed satisfactorily will result in a country having a robust and globally compliant anti money laundering regime.
Presently, Uganda is classified as a country that is not making significant progress in meeting the criteria agreed with FATF and ESAAMLG. Uganda is the only country in the world in this category. On February 20th 2015, FATF issued a Public Statement in which it explained Uganda’s present status as follows:
“Jurisdictions not making sufficient progress
The FATF is not yet satisfied that the following jurisdiction has made sufficient progress on its action plan agreed upon with the FATF. The most significant action plan items and/or the majority of the action plan items have not been addressed. If this jurisdiction does not take sufficient action to implement significant components of its action plan by June 2015, then the FATF will identify this jurisdiction as being out of compliance with its agreed action plan and will take the additional step of calling upon its members to consider the risks arising from the deficiencies associated with the jurisdiction.
Despite Uganda’s high-level political commitment to work with FATF and ESAAMLG to address strategic AML/CFT deficiencies, the FATF is not yet satisfied that Uganda has made significant progress in improving its AML/CFT regime, and certain strategic AML/CFT deficiencies remain. Uganda should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalizing terrorist financing; (2) establishing and implementing an adequate legal framework for identifying, tracing and freezing terrorist assets; (3) ensuring effective record-keeping requirements; (4) establishing a fully operational and effectively functional financial intelligence unit; (5) ensuring adequate suspicious transactions reportingrequirements; (6) ensuring an adequate and effective AML/CFT supervisory and oversight programme for all financial sectors; and (7) ensuring that appropriate laws and procedures are in place with regard to international cooperation for the financial intelligence unit and supervisory authorities. The FATF encourages Uganda to address its remaining AML/CFT deficiencies and continue the process of implementing its action plan.”
While the rest of the criteria have been met, the first two that deal with terrorist financing are the outstanding ones. These lie at the heart of the Anti Terrorism (Amendment) Bill. At the time of writing, the Bill is still at Committee stage. But few bills have been known to have the kind of impact this bill can have. If this Bill is not passed by June 22nd 2015, FATF will issue a Public Statement on June 26th 2015 moving Uganda to the Blacklist. What should concern all Ugandans of goodwill is exactly what the repercussions of this decision would be.
This public statement will identify Uganda as one of the countries that have strategic deficiencies that pose a risk to the international financial system. The countries on this list are divided into two categories: firstly, there are those countries which are subject to a FATF call on its members and other jurisdictions to apply countermeasures to protect the international financial system from ongoing and substantial money laundering and terrorist financing risks emanating from these jurisdictions. As of February 27th 2015, this section had two countries: Iran and the Democratic People’s Republic of Korea. The second category on the Blacklist is those countries which have not made significant progress in addressing their deficiencies or who have not committed to an actual action plan. This section of the list presently has only Algeria, Ecuador and Mynmar. It is likely that Uganda will join one of these groups. This list was not always this short. Many countries including Zimbabwe, have worked hard to get off this list.
In real terms, should this happen, the most affected parties will be the banking sector and the private citizens and members of the business community, whose livelihoods, education, businesses and other fields of life depend on remittances abroad. It is possible that funds intended to other jurisdictions will be bounced back or intermediary bank relations cancelled because banks in complying jurisdictions do not want to be associated with “High Risk” financial institutions. Many banks abroad have recently paid hefty fines for dealing with sanctioned jurisdictions such as Iran. It is easier for concerned banks to simply stop associating with their Ugandan counterparts.
The consequences here will be dire. A few examples will suffice: loss of government revenue in taxes on these transactions and corporate profits, inconvenience and possible loss of income to the business community, a slump in money remittances from abroad – which is presently a major driver in the economy, lives in need of urgent medical care could be lost for failure to pay medical bills on time, university and other students studying abroad could suffer unforeseen consequences resulting from delayed remittances, to mention but a few. And all it takes is for the Anti Terrorism (Amendment) Bill not to pass on time.
Many Ugandans who grew up in the early to mid nineties will have committed St Paul’s admonition on keeping bad company to heart. This was a famous household lesson. It is wise for parliament to remember that there are consequences to keeping bad company. What is not wise is to wait and see what happens when Uganda gets blacklisted. Although FATF does not have the mandate to issue treaty-like binding sanctions, the weight of their recommendations can be severe and this accounts for the vigor with which countries have worked to avoid being or remaining on the Blacklist. It is doubted that members of parliament would wish the grave consequences on Uganda’s private sector and public purse. But if they do not pass this Bill in time, as unintended as these consequences are, they will fall hard on the Ugandan population. It is only wise that we do not test the limits of the law of unintended consequences by knowingly choosing to keep undesired company in the community of nations.
 FATF (2015): Improving Global AML CFT Compliance: on-going Process – 27 February available at: http://www.fatf-gafi.org/countries/u-z/uganda/documents/fatf-compliance-february-2015.html#Uganda
 FATF Public Statement 25th February 2015 available at http://www.fatf-gafi.org/topics/high-riskandnon-cooperativejurisdictions/documents/public-statement-february-2015.html
 in 2012 for instance, this list had 17 countries. See the FATF Public Statement of 16th February 2012 available at: http://www.fatf-gafi.org/topics/high-riskandnon-cooperativejurisdictions/documents/fatfpublicstatement-16february2012.html
 For a detailed discussion on the consequences of being blacklisted and why countries would rather avoid being in such a position, see: Sharman, Jason. “The Bark is the Bite: International Organizations and Blacklisting” Paper presented at the annual meeting of the American Political Science Association, Hilton Chicago and the Palmer House Hilton, Chicago, IL, Sep 02, 2004 <http://www.allacademic.com/meta/p59944_index.html>