Uganda Financial Intelligence Authority calls for digital currency regulation

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Uganda’s anti-money laundering agency is calling on the government to implement and enforce regulations in the digital currency industry. The Financial Intelligence Authority (FIA) has been working on a campaign to get digital currency firms to register, but only a few had heeded the call.

Speaking in an event in the capital Kampala, the FIA executive director Sydney Asubo stated that digital currency companies have become a concern as a money laundering avenue. Despite its efforts to push them to register their businesses, most had defied its call. According to Asubo, a majority of the Bitcoin firms in the East African country operate illegally.

“Virtual assets service providers are now in category 16 of the most vulnerable to terrorism financing and money laundering,” he commented.

The FIA is tasked with monitoring, investigating and preventing money laundering in Uganda. It has continued to focus on the digital currency industry amid high adoption in the country. In December 2020, the Authority was behind the amendment of Uganda’s Anti-Money Laundering Act to finally include virtual asset service providers (VASPs).

With the amendment, the FIA was charged with oversight over all firms engaging in the digital currency sector. The amendment also required all VASPs to report suspicious transactions, undertake KYC and offer AML training to all employees. The FIA gave the VASPs until December 27 to register their businesses.

The affected persons and businesses are therefore called upon to register with the Financial Intelligence Authority not later than 27th December, 2020. #cryptocurrency

— TheFIA_UG (@ThefiaU) December 10, 2020

However, as the regulator now reveals, most VASPs dismissed this ultimatum. As per a report by local outlet Monitor, this has made it difficult for the Authority to protect consumers from the scammers in the industry. Asubo noted that already, a few scams have sprung up in Uganda and have defrauded a sizable number of people.

One report puts the number of investors in Uganda who have lost money to digital currency scammers at over 200,000. It further claims the amount of money lost is over $1 billion in the past two years.

Patrick Mweheire, the chair of the Ugandan Bankers Association has been quoted saying, “Ugandans are better off investing their money in cows than plunging into the unknown world of cryptocurrencies.”

See also: CoinGeek Live panel, Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers