REAL ESTATE AND MONEY LAUNDERING IN UGANDA

Published by Patra K on

Real estate and money laundering in Uganda

Research has proven that there is undoubtedly a linkage between money laundering and real estate business. Uganda witnessed a significant rise in real estate especially towards the electioneering period of January 2021 which further proves that money laundered through real estate could have ended up funding campaigns for some of the candidates.

According to the July 2021 Kampala Market Performance Review by KnightFrank a leading independent real estate consultancy in Uganda, there are 161 new residential apartments currently under construction and are scheduled for completion within 18 months. Ugandans have been left pondering the rate at which these buildings are being erected with many of them coming to a conclusion that real estate is an area that allows money launderers to invest.

Despite expert predictions of sluggish growth of the sector due to how badly it was hit by the pandemic, general performance indicators recorded during the first half of 2021 conveyed a resilient sector. This signposts that there is a relationship between the boom in real estate sector and money laundering. 

Early last month, the world woke up to the news of the Pandora papers published by International Consortium of Investigative Journalists (ICIJ) leaking 11.9 million documents exposing offshore companies. This leak described as the most expansive expose on financial secrecy in history revealed more than 29,000 offshore companies from 200 countries world over, African countries inclusive estimating about $32 trillion hidden in tax havens. 

The investigation exposed a number of politicians in Africa including Kenyan President Uhuru Kenyata, and Democratic Republic of Congo presidents, Felix Tshisekedi. In Uganda Jim Muhwezi, Cabinet Minister for National Security and Member of Parliament representing Rujumbura County in Rukungiri was implicated in the scandal as well. 

Since a number of politicians were implicated in this scandal, it brings us to the conclusion that some of the moneys could have been used to finance the campaigns of some of these politicians. Once the money has been cleaned through real estate, it is then integrated into the economy and legitimized to finance campaigns.

According to Yona Wanjala, a certified money-laundering expert and Executive Director Defenders Protection Initiative, real estate business has been very attractive to the money launderers for several reasons such as fulfilling their desire for secrecy to protect their assets as well as protection from criminal investigations. 

Mr. Wanjala revealed to SecretsKnown that when crime generates resources and people get illicit finances, they hope no one can trace how they got and spent the money-making real estate the only way they can invest the money whilst covering their backs.

The SecretKnown is that real estate provides a good opportunity to invest illicit money because it promotes cash expenditure. Individuals move with money stacked in cars, purchase land and houses, and yet if the money moved through banks, it would have raised queries where the bank would be required to send information to the Financial Intelligence Authority (FIA) for analysis hence provoking investigations. 

In an interview with SecretsKnown, Uganda’s FIA boss, Sydney Asubo agreed that real estate indeed breeds money laundering because the sector is cash-intensive, with lack of transparency and systematization in dealings. He added that anyone can purchase property with no trace hence a lot of secrecy behind the true beneficial owners of the property.

The other important element is that when crime generates money it does not care about profit. Regardless of the cost of real estate, money launderers still invest in the sector as long as it cleans up the proceeds of crime. 

This makes the investigation difficult because of no proof that this money was illicitly got due to difficulty in identifying the actual owners of structures. In Uganda, about 80% of the land is not titled and one can easily own land with no trace. The land registry isn’t digitalized hence the reliance on hardcopy mechanisms to determine ownership.  

The other challenge in enforcing the anti-money laundering act is the fact that real estate agents in Uganda are not regulated. Through an FIA recommendation, however, Ministry of Lands and Housing has initiated steps to remedy this problem and has started registering agents.  

Additionally, counties in conflict like neighboring South Sudan have become a good breeding ground for money laundering. SecretsKnown suggests that for Uganda to make her anti-money laundering strategies robust at both private sector level and government level, the country should work with banks to come up with proper mechanisms of following and tracking finances across borders mainly with countries that do not have strong anti-money laundering laws. 

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1 Comment

repose · November 6, 2021 at 1:54 am

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