As Ugandans sought ways to weather a lockdown aimed at sparing the country the worst ravages of the Covid-19 pandemic, and the economic hardship that came with it, scams aimed at turning a profit from the anxiety and confusion borne of the disease took novel forms.
A multi-faceted threat – ranging from traditional forms of money laundering and wire fraud to scams targeting users of mobile payment systems – seems likely to require greater coordination among Ugandan regulatory agencies, which themselves are operating on fewer resources as the state devotes resources to pandemic response efforts.
The scale of the state’s resource crunch was evident in early May, when the IMF announced approval of a $491 million loan to help Uganda deal with health spending and balance of payments pressures arising from the pandemic.
In interviews with Chimpreports, officials tasked with various aspects of the fight against pandemic-specific fraud laid out their remit for battling pandemic fraud in ways highlighted their interdependence in that effort.
Financial Intelligence Authority (FIA) Executive Director Sydney Asubo, in a statement on 8 April warned of the risk of novel money laundering and terror financing activities capitalising on the circumstances of the pandemic.
These could include exploiting heightened financial volatility, as rattled investors flee for liquidity, to mask proceeds from illicit activities, or making use of corporate insolvency proceedings to obscure the trail of specific concentrations of funds.
“Illicit proceeds can also be introduced to the system as customers look for new means to restructure loans and credit lines. There is also a concern that large withdraws of cash and liquidation of shares portfolio may provide an opportunity for money launderers to mingle illicit funds with clean money when the funds are later returned to the system,” Asubo said.
The Bank of Uganda’s Executive Director-Supervision, Dr Twinemanzi Tumubweine, said in an email exchange that the general anxiety associated with the Coronavirus outbreak laid the ground for Ponzi schemes.
“When there is uncertainty, people need hope, and if this need for hope is contaminated with greed and ignorance, a fertile ground to Ponzi schemes and all manners of con artists is created,” he said. In 2019, thousands of Ugandans lost over Shs 10b to a cryptocurrency company, Dunamiscoin in a Ponzi scam.
Tumubweine said a Covid-19 relief fund established by the office of the prime minister was one potential focus of fraudulent activity in the banking system, with reports of suspicious transactions funneled from the banking system’s constituents up to the BoU and FIA.
Ibrahim Bbosa, the Uganda Communications Commission (UCC) spokesperson, said one category of fraud targeted the users of mobile payment systems. In one variation of this scheme, victims are contacted by people making representations as telecoms operator or UCC officials threatening to switch off their simcards because they are not fully registered.
“Because of the lockdown, people have no physical access to their service providers and hence may treat such a phone call as legit, once you fall prey, the fraudsters will take you through a complicated process that will in the end make you lose your money that you have on your account. We have continuously sensitized Ugandans to get alert but also asked service providers to reach out to their customers to ensure that they are aware of this situation,” Bbosa said in a phone interview with Chimpreports.
This story was produced by www.chimpreports.com . It was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation in partnership with the African Centre for Media Excellence. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.