The Chief Executive officer, Diamond Trust Bank (DTB) Godfrey Sebaana has called for sustained collaboration between the public and private sectors to ensure Uganda remains compliant with international anti-money laundering (AML) and financial crime standards, following the country’s recent removal from the Financial Action Task Force (FATF) Grey List.
Uganda was grey-listed by the FATF from February 2020 to February 2024 for deficiencies in its Anti-Money Laundering, Counter-Terrorism Financing (CTF), and Counter-Proliferation Financing (CPF) frameworks. The impact on the economy was severe, as foreign direct investment (FDI) declined, cross-border transactions became more expensive and time-consuming, and compliance costs for financial institutions surged.
The banking sector, bore the brunt of this listing and faced various adjustments in Thier operations like increased scrutiny from international correspondent banks, restricting and terminating relationships. These made it difficult and costly for banks to support international trade and financial services.
The grey listing also had significant consequences for Uganda’s private sector, which struggled with high operational costs, restricted access to international financial networks, and reputational damage.
DTB CEO, Godfrey Sebaana, emphasized the broader challenges faced by companies during this period. “Companies in Uganda were required to invest heavily in enhanced AML/CFT measures. Local banks had to allocate additional resources to upgrade systems, implement advanced transaction monitoring tools, and hire additional compliance officers. These investments increased operational costs for many businesses,” Sebaana said.
“Investors, both foreign and domestic, view grey listing as an indication of higher risks, and as a result, Uganda saw a significant decline in investments. This loss of investor confidence had a ripple effect on the entire economy,” Sebaana noted.
Reputational Damage and Stricter Regulatory Scrutiny
The reputational damage of being grey-listed also weighed heavily on Uganda’s private sector. Financial institutions, in particular, faced enhanced transaction reviews from correspondent banks. “Ugandan financial institutions experienced increased scrutiny, and this tarnished their reputation, making it harder for them to attract customers and international partners,” Sebaana said.
Additionally, regulatory bodies such as the Bank of Uganda and the Financial Intelligence Authority (FIA) imposed stricter oversight on financial institutions during the grey listing period. “This increased scrutiny led to more frequent inspections and audits, which, while necessary for compliance, placed additional pressure on the private sector,” Sebaana added.
Looking Forward: Strengthening Compliance and Collaboration
In light of Uganda’s recent delisting from the FATF Grey List, Sebaana emphasized the importance of maintaining vigilance to ensure that the country does not return to the grey list. “Exiting the Grey List is a substantial milestone for Uganda, but it must be seen as the beginning of an ongoing commitment to compliance. We cannot afford to be complacent. To avoid returning to the Grey List, Uganda must continue to strengthen its regulatory oversight and invest in advanced compliance technologies,” Sebaana stated.
He stressed that public-private collaboration will be critical to maintaining these gains. “The partnership between the government, regulators, and the private sector played a crucial role in this achievement. Going forward, this collaboration must continue, and it is essential to empower regulatory bodies like the FIA with greater resources and autonomy to ensure robust supervision and effective enforcement,” Sebaana noted.
Investing in cutting-edge tools and data analytics to enhance real-time monitoring and improve risk assessments will be key to detecting suspicious financial activities early and fortifying Uganda’s defenses against emerging financial crimes. Sebaana also highlighted the importance of ongoing dialogue between regulators and private sector stakeholders, along with the need for joint capacity-building initiatives, information sharing, and risk mitigation strategies.
“To maintain Uganda’s position in the global financial ecosystem, we must position the country as a competitive, secure, and attractive destination for global investment. At DTB, we remain committed to leading the way in building a robust and compliant financial ecosystem that supports Uganda’s long-term sustainable economic growth,” Sebaana concluded.
The Dialogue, themed “From Grey to Greatness – Ensuring Uganda Never Returns to the FATF Grey List through Public-Private Collaboration and Partnership,” brought together key stakeholders to discuss sustainable strategies for combating financial crimes and enhancing Uganda’s standing in the global financial community.
