As a result of a growing number of cryptocurrency-based frauds and financial pyramids, the Ugandan Ministry of Finance warns against investing in crypto assets and pyramids. The government also plans to update its criminal code in order to prohibit such type of frauds.
Financial pyramids are the bane of investors from Uganda
As local media informs, Uganda's finance minister, David Bahati, spoke to the Uganda's Parliament, asking the government to publicly warn the investors about the risk of investing in unregulated cryptocurrencies and financial pyramids.
Apart from that, the Minister of Finance asked the government to introduce a total ban on financial pyramids, operating in Uganda mainly on the cryptocurrency market.
The problem with Uganda's financial pyramids is that the companies involved are prone to register themselves as legitimate finance companies, and then start offering fake services. While doing so, they offer high returns and, in most cases, operate for years by paying new investors the money which had been invested before by new participants.
The fact that former and current government members and other influential people are usually involved in these frauds is also a huge obstacle in the fight against the pyramids in Uganda. For instance, one of the pyramid companies was run by the son of a former prime minister, Ruhakan Rugund. Hon Mwine Mpaka, an MP, added that the level of corruption also includes the government, which protects known fraudsters in high-profile cases.
"The Financial Intelligence Authority submitted a list of all companies involved in this fraudulent business and the Ministry of Finance knows them but they are quiet. I know of a bishop who is involved in this business and he is heavily guarded."
- said Mpaka.
Uganda's fight with cheaters
Rebecca Kadaga, Speaker of Parliament, urged the Minister of Finance to explain the efforts made by the government in the fight against cryptocurrency pyramids. According to Bahdi, the most important thing is the fact that the Ministry of Justice and Constitutional Affairs has been asked to accelerate new legislation criminalizing such dishonest investment programs.
What is more, the current Anti-Money Laundering Act will be fixed so as to include virtual assets, for example cryptocurrencies which will cause crypto asset companies to be subject to the jurisdiction of the Financial Intelligence Authority, which will enforce the amendment.
The Ugandan Central Bank and Ministry of Finance are supposed to work together as well in order to make citizens aware of the risks of cryptocurrencies and Ponzi schemes, as well as the risks associated with investing in the pyramids.
Moreover, Bahati made an announcement in which he informed that the National Expert Group on the Fourth Industrial Revolution will continue to advise the government on these matters. Originally, the group (founded in 2019) was supposed to analyze blockchain, cryptocurrencies, artificial intelligence, internet of things, robotics and nano, and biotechnology projects. Currently, it also analyzes global trends and advises parliament on how make the best applications of these technologies in Uganda.