Real estate and betting attract illicit money
A delegation of global anti-money laundering team is set to assess eforts Uganda has put in place
Gaming, real estate and legal practice are at high risk of providing avenue for laundered money into Uganda’s economy. According to findings from the National Risk Assessment reports, there is a need for tight regulations in these sectors as the country seeks to improve its antimoney laundering enforcement regime.
The National Assessment reports Risk are a compliance requirement set by the Financial Action Task Force (FATF), a global organisation based in France that co-ordinates enforcements targeting money laundering and terrorism financing in more than 155 countries. Money laundering refers to the process of transferring ill-gotten income through the financial system and concealing it by acquisition of legitimate assets like land and buildings.
These reports covered six selected professions deemed significant in the local economy and major sectors like banking, insurance and capital markets, according to the Financial Intelligence Authority (FIA) — the lead agency charged with enforcement of anti money laundering and anti terrorism financing laws.
The assessment reports were approved by the Cabinet earlier this year and will be reviewed by a FATF delegation, which is expected in Kampala before end of September. The results of this review mission will influence FATF’S decision to either remove or retain Uganda on the list of countries that have exhibited severe weaknesses in their antimoney laundering regimes.
The risk assessment reports revealed that gambling industry bears one of the highest money laundering risks with a score of 0.73. According to the assessment score card, an outcome of more than 0.7 is considered high risk while a score below 0.5 is rated low risk.
Exposure to money laundering activities is largely attributed to strong investor participation tied to countries with huge money laundering challenges that include Israel, Russia and China. In addition, preference for physical cash payments within casinos and betting shops as opposed to bank transfers is equally blamed for the industry’s high money laundering risks.
Uganda’s gambling industry is composed of less than 10 licenced casinos and more than 50 betting outlets belonging to different companies, which are scattered in various urban centres.
While the casinos attract high end clients with lots of money to spend on sophisticated games like Russian Roulette and Black Jack, small gaming shops specialise in sports betting products that offer low ticket prices of Ush1,000 ($0.28) per unit and allow gamblers to bet on more than one game under the same ticket.
Sports betting attract low end clients that include students who prefer placing bets on European soccer league games and national team soccer matches. The gambling industry currently generates annual turnover of Ush70 billion ($19.3 million) and is governed by the Gaming and Lotteries Act of 2016.
A previous scandal that involved foreign shareholders of Ceasar’s Palace Casino, a City gambling house that closed shop last year offered clues on the scale of money laundering challenges faced by the industry.
A nasty fallout experienced in 2015 amongst the Israeli and Argentinian investors that managed the casino reportedly callaed for the intervention of some individuals associated with their native country as they battled over sharing profits realised from the gaming business, industry sources claimed.
“A previous case of vicious infighting between some players in the sector that had links to foreign mafia groups prompted us to seek Interpol assistance so as to improve supervision in the market. We also brought the head of Police Criminal
A previous case of vicious infighting between some players in the sector that had links to foreign mafia groups prompted us to seek Interpol assistance so as to improve supervision in the market.”