Financial and legal experts have called for tougher laws in order to curb illicit cash flow that is costing Uganda hundreds of millions of U.S. dollars.
The experts were on Monday meeting here to identify solutions to illegal cash flow whose figure now stands at 528 million dollars annually, according to a report by Oxfam.
Raymond Baker, Chief Executive Officer of Global Financial Integrity, a research and advocacy organization in the United States said there is a shadow finance system that is used to steal from the poor.
“Systems have been created to move, hide and shield millions of dollars by corporations, governments, drug dealers – a shadow system that is undermining the rule of law,” Baker said.
“I have never known a multinational corporation that has not used this shadow financial system to evade and avoid taxes in countries where they operate,” he said.
The experts meeting under the theme, “Illicit Financial Flows: Exploring conceptual and practical challenges in Uganda” identified the forms of illegal cash flows as use of fake foundations, anonymous trust accounts and disguised corporations.
The experts said the perpetrators ride on loop holes in financial regulations to siphon millions of dollars from developing countries.
They argued that for instance in Uganda, the central bank, Bank of Uganda does not regulate the amount of cash flow out of the country. It is only limited to regulating internal transactions.
Jane Seruwagi Nalunga, an official of Southern and Eastern Africa Trade Information and Negotiations Institute, said multinational companies should report to the respective countries in which they are working. She said this would help to monitor the external cash flows closely.
Uganda was removed from the money laundering list of shame last year by the Financial Action Task Force, an intergovernmental body that regulates efforts to fight money laundering and terrorism financing within member states.
The east African country had been placed on the list in 2015 because of weak laws that cannot stop illicit cash flows. The other countries on the list include Yemen, Bosnia, Ethiopia, Iraq, Syria, Sri Lanka, Trinidad and Tobago and Vanuatu.
Uganda currently has in place the Financial Intelligence Authority which is charged with combating money laundering.
The country’s tax body, Uganda Revenue Authority (URA) also collaborates with other state institutions to check goods that are destined for export.
“URA works with Uganda Wildlife Authority to intercept the illegal transfer of ivory. As work goes on, the schemes get more sophisticated. URA looks at collaborations as critical and cannot end illicit financial flow alone,” Stella Nyapendi, an official from URA said.
The organizers of the experts’ meeting, FIDA, a group of female lawyers said government needs proper legal advice before entering into contract with multinational corporations. They argued that poorly negotiated contracts can result into tax avoidance and finance secrecy that leads to illicit financial flow. Enditem