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Is Kampala’s housing sector an avenue for money laundering?

Kololo, Naguru and Ntinda are dotted with luxurious apartments

Kololo, Naguru and Ntinda are dotted with luxurious apartments

Kampala’s leafy suburbs of Kololo, Naguru and Ntinda are dotted with luxurious apartments and residential houses.

Malcolm X Avenue in Kololo has transitioned from an avenue that hosted residential areas for senior government officials into a home of luxurious high-end apartments. Whereas some apartments along this avenue are under construction, many of the completed ones remain unoccupied.

When some of these properties are listed for sale, they go for $5 million (Shs 18 billion) or more, prices above the pay grade of many Ugandans. Such exaggerated prices are linked to the proliferation of illicitly-acquired money flowing into Uganda’s real estate sector. This is money acquired through illegal means such as corruption, tax evasion, etc.

There are three stages in which illicit money is moved into an economy. The initial proceeds of crime are placed in a reputable financial system. This money is then used to conduct different transactions in the form of investments in sectors such as real estate. It becomes difficult to trace the funds back to their illicit origin.

The money is then spent freely and legally without further concealment. In their 2020 Wealth Report, Knight Frank, a leading global property consultant, lists Kololo among the latest investment hot spots.

“Space in Kololo is predominantly bought by expatriates and multinationals seeking work/walk environments with a range of housing choices, pedestrian connectivity, transit, and cycling options.”

The same report estimated that Uganda would have 170 high-net-worth individuals (with a net wealth of $1 million or more) by 2024. The report does not show how these millionaires will shoot to that number.

Uganda remains on a list of jurisdictions under increased monitoring (grey list) by the Financial Action Task Force (FATF), a global intergovernmental organization policymaking body.

It was established by the G7 countries of Germany, the United States of America, Canada, France, Italy, Japan, the United Kingdom, and the European Union as a ‘non-enumerated member’. Its major purpose is to establish international standards and to develop and promote policies, both at national and international levels, to combat money laundering and the financing of terrorism.

In their February 24, 2023 statement, the FATF threatened to take further action against Uganda if it failed to implement its action plan to address its strategic deficiencies by June 2023.

Among these, Uganda is expected to have developed and implemented risk-based supervision of financial institutions and designated non-financial businesses or professions like real estate agents. Wilbrod Owor, the executive director of the Uganda Bankers Association, said different entities in Uganda were working tooth and nail towards the attainment of the deadline set by the FATF.

He explained: “It would be terrible for us as a country if we deteriorate or remain stunted on the grey list. Being on a grey list has huge implications on international trade. This is in form of high costs for electronic and financial transfers between commercial banks, large costs on processing letters of credit, and an increase in transaction fees and overseas remittances with reduced dollar inflows.”

On the proliferation of illicitly acquired wealth into Uganda’s real estate sector, Owor added, “The regulations on the real estate of Uganda are not as strong. More interventions in the sector are needed to make it watertight. As bankers, we have worked very hard to ensure that we do not lend money to suspicious individuals who could use our money to authenticate their illicit activities.”


Alex Kakande, an auditor with global accounting firm Ernst and Young, said the corrupt environment of Uganda encourages the inflow of illicitly- acquired wealth.

“People can bribe their way into anything. The corruption within [many government departments] encourages several inflows of money. Politically- exposed persons use their positions to move money into and out of the country.”

A source who preferred anonymity said, “Money is moved into Uganda as debt to finance a company. No law in Uganda bars companies from accessing any form of financing, which includes borrowing. When this money enters the financial system and URA deducts the interest on debt, it becomes clean money. This money is then parked in the real estate sector until a time when one needs it. These transactions shall be completed through the financial system.”

Section 25 of the Income Tax Act, as amended, allows deductions on interest paid on debt. Since the intention of the movement of illicitly-acquired money from one jurisdiction to another is to give legitimacy to its source, an individual is willing to incur this minor cost as a tax by, for instance, creating shell companies that are used to make various investments in various jurisdictions.

Kelvin Balyebuga, a tax and finance expert at Tumukunde & Company Advocates, added that some of these shell companies give legitimacy to illicitly-acquired funds by making numerous investments in attractive sectors like the real estate industry.

“Assets created under it are at times then gifted by way of deed to scrupulous individuals, thus creating a seemingly legitimate investment and source of funds.”

He added that the unregulated forex bureau system allows illicit money to flow into the country.

“You can walk into some forex bureaus and exchange dollars to shillings. No one will ask for your source of money at the forex bureau.”

In September 2019, the High court ordered the government to unfreeze the bank accounts of six companies and their directors, whom it had accused of facilitating money laundering.

These companies included; Sundus Exchange and Money Transfer Limited, Haleel Commodities Limited, Victory Group of Companies Limited, Qemat Al Najah Gen. Trade Limited, City Love General Trading Limited, and Hilowle General Trading Company Limited.

The Financial Intelligence Authority (FIA) had in May 2018 issued directives to the companies’ bankers instructing them to freeze all funds in their respective bank accounts. These bankers were the Bank of Africa, Equity bank, Stanbic bank, Diamond Trust bank, KCB bank, and Barclays bank.

The government had accused Sundus and Money Transfer Ltd of using its licence to facilitate money laundering and deliberately operating a business in violation of foreign exchange regulations. However, a High court judge said the decision to prosecute Sundus and the rest was tainted with illegalities and ordered that the impugned decision be quashed.


“Since Uganda is predominantly a cash economy, several land acquisitions of any value can be made in cash. This is outside the regulated banking system,” said a source within Uganda Revenue Authority.

The source added: “There are flaws in the valuation process. A valuation surveyor can choose to either understate or overstate the value of the land. This is the same challenge we face with the ministry of Lands, Housing and Urban Development. People at Lands are only interested in the stamp duty. If the stamp duty has been paid, the transfer of land ownership can be effected.”

A list on the ministry of Lands, Housing and Urban Development website shows that Uganda has only 104 registered valuation surveyors.

Lawyer Balyebuga noted that due to the freedoms of contracting, “the government can’t force individuals to make the payments through the bank yet they are the monitored financial institutions.”

He advised that Uganda’s land laws should have requirements for resultant beneficial owners so that third parties do not use legitimate individuals to purchase and own land.

“You can insist that land transactions should be made through the bank. The ministry of Lands should be able to work with the Financial Intelligence Authority (FIA) during land transfers. FIA should then work with or liaise with the Bank of Uganda to see whether there is information that backs a 27-year-old individual buying land worth Shs 4 billion. If there is no information, then this person can be invited to the bank to explain his sources of money. If it is legitimately-acquired wealth, one can never fail to defend their source of wealth,” Balyebuga said.

Dr Nathan Ndibwami, the former president of the Institution of Surveyors of Uganda, said: “We do not have the proper standards of valuation. This loophole is exploited by some unscrupulous surveyors. We are working together with the ministry of Lands to develop an Act and valuation standards to reduce the disparities in land values.”

This story was written as part of Wealth of Nations, a media skills development programme delivered in partnership with the African Centre for Media Excellence.

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