EA’s unholy nexus: Diamonds, guns and money-laundering

In line with a number of East African countries, Uganda’s parliament has started formulating a law against money laundering.

The intention is to bring all the money laundering laws in the EAC and SADC regions in line with one each another other and thus stem the flow of funds from the illegal economy into the legal economy.

The proposed law was cleared after the Bill was published in the government gazette in August 2009.

Nevertheless, Uganda taken made no significant steps to fight money laundering.

It appears that the whole anti-money laundering initiative in the EAC zone is driven by international pressure based on concerns regarding terrorism funding and drug trafficking.

This leaves huge gaps in the laws as well as the political will to determine what will be monitored and prosecuted.

Money laundering is normally a complicated process, and may in fact have very little or nothing to do with terrorism funding.

With almost no statistics available in Uganda on money laundering activities, it is difficult to gauge the full extent of the problem.

It also just so happens that the Kimberly Process, the scheme of certificates of origin for diamonds launched in 2001 with the backing of UN Security Council resolutions, is unravelling.

Smuggling of resources from the Democratic Republic Congo (DRC) is rife.

While plundering the DRC, Uganda’s diamond exports to Belgium tripled. Uganda is not a diamond producing country.

The failure of the Kimberly Process could cause anti-money laundering initiatives to backfire.

If gold and diamonds can be easily procured in a hard-to-trace manner, it provides an alternative way to mop up any spare and unaccountable dollars floating about in the system from a number of illegal activities. It is also a convenient avenue to move wealth around the world in a difficult to detect manner.

With gold easing up to the $1,200 an ounce mark, it becomes an increasingly attractive means to store and hide wealth.

Diamonds too provide an excellent medium for money laundering.