Business
Funding terror? The flip side of forex boom
About 90 per cent of the operators do not indicate the sources and purposes of foreign exchange. This could assist money laundering. / Courtesy: google pics
It is due to this performance that the Bank of Uganda continues to recognise the crucial role played by forex bureaus and money remitters as partners in deepening the financial sector and fostering macroeconomic stability and growth in the country, Ms Bagyenda said.
She added that increased risk aversion by investors and the effects of the global recession were presenting significant macroeconomic challenges to Uganda’s financial system.
If the global recession is prolonged, Uganda could face reduced export earnings, a decline in foreign direct investments and reduced remittances, which would significantly reduce the banking system liquidity and exert pressure on exchange rates and debt service capacity.
Uganda’s forex bureaus and money remitters operate under the Foreign Exchange Act of 2004 and the Foreign Exchange Remitters Act 2006.
The two Acts provide for exchange of foreign currencies in Uganda and making of international payments and transfer of foreign exchange; and for other related and incidental matters.
Ms Bagyenda promised more rigorous inspections to ensure compliance with laws through off-site and on-site surveillance of forex bureaus and money remittance sector.
In a related development, the bank’s assistant director of non-bank financial institutions, Benedict Ssekabira, said Uganda and Kenya had started harmonising the supervision of forex bureaus.
Two Bank of Uganda officials were to be in Kenya from May 4-8 for an insight into on-site and cash audit operations, he said.
Likewise, CBK officials have been
in Uganda for lessons on risk-based supervision of commercial banks and financial institutions. The visits were arranged by a committee of the East African Monetary Community, which is handling the East African Monetary Union.
The East Community Monetary Committee Affairs — under the umbrella of the five governors of central banks of Tanzania, Kenya, Uganda, Rwanda and Burundi — is trying to beat the 2012 target of fast-tracking the East African Monetary Union.
