Anti-money laundering law failing work of NGOs – study

What you need to know:
A study indicates that non-governmental organsations (NGOs) are now deemed to be accountable persons, which is contrary to the requirements of Financial Action Task Force

Requirements that demand not-for-profit organisations to monitor and detect money laundering and terrorism financing contradict accepted international standards, according to a study by Defenders Protection Initiative.

The requirements provided under the Anti-Money Laundering and Combating the Financing of Terrorism regime puts not-for-profit organisations such as non-governmental organisations and charities, in the same basket with banks, real estate agencies and extractives as some of the sectors susceptible to money laundering.

They also deem non-profit organisations as accountable persons, which, according to the study, requires such entities to formulate policies, controls and procedures to monitor and address risks relating to money laundering.

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However, the Defenders Protection Initiative study noted that this is not consistent with recommendations of the Financial Action Task Force, the global money laundering watchdog.

The study, which was compiled last year, sought to justify why non-profit organisations in Uganda should be de-classified from the list of accountable person because the Financial Action Task Force omits such organisations from the list of high risk setups.

Mr Yona Wanjala, the Defenders Protection Initiative team leader, at the weekend told Monitor that the Anti-Money Laundering Act, 2013, which was amended indiscriminately, burdens, particularly non-governmental organisations with responsibilities that curtail their operations.

“The Act makes us [non-governmental organisations] accountable but according to the Financial Task Force, it is clear that we cannot be treated like profit-making entities,” he said, noting that government has so far not shown legitimate justification why non-governmental organisations should be deemed as accountable persons yet their operations are regulated and audited by the NGO Bureau.

Therefore, the study noted, government should review the Anti-Money Laundering Act to bring it to speed with internationally accepted best practice for regulating not-for-profit organisations.

When contacted at the weekend, Mr Sydney Asubo, the Financial Intelligence Authority executive director, told Monitor he was in Zambia in a meeting of the Financial Action Task Force, in which issues relating to money laundering laws, regulations and impact on not-for-profit organisations would be discussed.

“We are in Zambia. We are presenting this matter to the task force. They will make their analysis and when we get back home, a comprehensive statement will be made,” he said.

The meeting was also attended by Minister of Justice Norbert Mao, Finance state minister in charge of General Duties Henry Musasizi and Minister of State for Internal Affairs David Muhoozi.

The Venice Commission, which is the Council of Europe’s independent advisory body on constitutional matters, has ruled in several cases that states must refrain from imposing burdensome administrative requirements on non-governmental organisations.

The study, therefore, notes that whereas money laundering is a threat, focus should be put on effective supervision to close vulnerability gaps rather put in place demands that make operations of non-profit entities almost impossible.

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