National Consultant to conduct a Money Laundering /Terrorist Financing Risk Assessment on Virtual Assets and Virtual Asset Service Providers in Uganda

Result of Service Developed a detailed inception report/ plan in form of a report demonstrating a clear understanding of the assignment.

Conducted a desk review of the various data sources and literature.

Develop and implement a data collection tools document (key informant interviews, focus group discussions, survey and participatory mapping).

Submitted preliminary report on the assignment, to receive comments and feedback from Financial Intelligence Authority (FIA) and other relevant stakeholders.

Submitted a well-developed and comprehensive Risk Assessment Report on Virtual Asset (VA) & Virtual Asset Service Providers (VASPs).

Work Location Kampala, Uganda

Expected duration October - December 2023

Duties and Responsibilities Background of the assignment:

United Nations Office on Drugs and Crime (UNODC) is the Office of the UN Secretariat mandated to assist Member States in countering and preventing illicit drugs, crime, corruption, and terrorism.

As part of its efforts to support the Criminal Justice Programme in Uganda, United Nations Office on Drugs and Crime (UNODC) is collaborating with the Financial Intelligence Authority (FIA) to strengthen Crime Prevention and Criminal Justice. The initiative aims at protecting Uganda from illicit financial flows and money laundering and illicitly obtained assets are recovered and returned. This is intervention is in line with expected outcome 5 of the intervention.

The last decade has seen a phenomenal rise in the number of new digital instruments promising easier, faster, and cheaper global payments and transfers. These digital representations of value and contractual rights comprise a broad (and expanding) category of assets. Common marketplace terms referencing such new products include cryptocurrencies, digital currencies, crypto assets, virtual assets, all describing systems of storing/capturing value and rights in digital form. Some of the most well-known digital assets rely on cryptographic technology to secure transactions and control the creation of additional units, underpinned by distributed ledger technology (DLT), such as blockchain, to construct a ledger (or a database) that is maintained across a network.

The first of these instruments, Bitcoin, was launched in 2009. Since then, thousands of cryptocurrencies have been issued, with varying degrees of success. As of April 14, 2023, with a capitalization of at least US$1.92 trillion (for the top 101 cryptocurrencies) and, for a dozen of them, a daily turnover of more than US$1 billion, cryptocurrencies now represent a small but not negligible portion of financial markets. This space is characterized by the speed at which different types of assets and business models are created, as well as their complexity. This includes stablecoins with the potential for mass adoption.

In line with the terminology set by the Financial Action Task Force (FATF), the internationally recognized standard setter for anti-money laundering and combating the financing of terrorism (AML/CFT), this note refers to these new instruments as Virtual Assets (VA) and to the new actors as Virtual Asset Service Providers (VASPs). The FATF definition of VA explicitly excludes digital representation of fiat currencies, securities and other assets that are covered elsewhere in the FATF standards. National digital currencies, including central bank digital currencies (CBDCs), in practice, share some similarities with VAs, are also included in these terms of reference.

VAs offer many potential benefits. As noted in the IMF’s earlier publications, these include greater speed, lower cost and increased efficiency in making payments and transfers, including across borders, with the potential to improve financial inclusion. DLT offers potential benefits that go far beyond VAs. Many countries across the world are currently looking into leveraging this new technology to issue domestic “currency” in virtual form, CBDCs. At the same time, however, VAs are susceptible to criminal abuse. Some of their features, in particular their varying degrees of anonymity or pseudonymity— raise new challenges for competent authorities. Criminals have misused these features to facilitate fraud, theft, money laundering (ML) and terrorist financing (TF), amongst other crimes. Without strong mitigation, VAs can pose a significant threat to the integrity of the global financial system. ML, related predicate crimes, TF, and the financing of the proliferation of weapons of mass destruction (PF) can all be facilitated with VAs and can all have serious economic consequences. Preserving the integrity of the global financial system is a necessary aspect of ensuring financial stability, sustainable growth and inclusive economic development. Effective anti-money laundering and combating the financing of terrorism (AML/CFT) frameworks are crucial in that respect.

In June 2019, the FATF finalized amendments to its global standards to clearly impose AML/CFT requirements on VAs and VASPs. In October 2019, the FATF amended its methodology to provide guidance on how to assess requirements relating to VAs/VASPs. Recommendation 15 requires, among others, that countries ‘should identify, assess, and understand the money laundering and terrorist financing risks emerging from virtual asset activities and the activities or operations of VASPs. Based on that assessment, countries should apply a risk-based approach to ensure that measures to prevent or mitigate money laundering and terrorist financing are commensurate with the risks identified. Countries should require VASPs to identify, assess, and take effective action to mitigate their money laundering and terrorist financing risks.

This VA/VASP risk assessment contributes towards meeting the requirements of Recommendation 15 to identify, assess and understand the ML/TF risks which the VA/VASP ecosystem could pose for Uganda.

To this end, UNODC in collaboration with FIA will engage a consultant to conduct an ML/TF & PF Risk Assessment on the sector of Vas and VASPs. The end results of this assessment shall give the country a clear understanding of where to focus resources and apply a risk-based approach to supervision as guided by international AML/CFT standards.

Purpose of the assignment:

Under the overall guidance of the Head of Office, the Consultant will examine and analyze the ML/FT/PF risks posed by the Vas and VASPs in Uganda with focus placed on ML and TF crimes, due to vulnerability of VAs and VASPs to be misused by undocumented businesses including import and export businesses trading in stable VAs to move value overseas; terrorist organizations posing as legitimate entities; exploiting legitimate entities as conduits for money laundering and terrorist financing, including for the purpose of escaping asset-freezing measures; and concealing or obscuring funds through VAs intended for perpetrating crime.

Specific tasks to be performed by the consultant:

The consultant will work under the overall supervision of the Head of the Office, UNODC Uganda, direct supervision of the Programme Management Officer, in performing the following substantive duties and responsibilities:

a) Identify and assess the ML/TF risks, threats and vulnerabilities of the VAs and VASPs sector. b) Profile and classify the VAs & VASPs according to their risk levels. c) Propose actionable recommendations on how the identified risks can be mitigated (vulnerabilities reduced, and threats minimized). d) Develop outreach and monitoring plans for higher risk VAs & VASPs. e) Formulate action plans to guide/inform policy makers, private sector, researchers and academia.

Qualifications/special skills An advanced degree (Master's or equivalent) in business administration, accounting, economics, development studies, or related discipline is required. A first level university degree in similar fields in combination with two additional years of qualifying experience may be accepted in lieu of the advanced university degree. Minimum of five (5) years of relevant national/international working experience in the area of Money Laundering /Terrorist Financing Risk Assessment on Virtual Assets and Virtual Asset Service Providers is required. Demonstrated knowledge and experience in conducting Risk Assessments in the financial sector or related fields is required. Experience in quantitative and qualitative research in the field of money laundering, terrorism financing, and/or related financial crimes is required Knowledge of relevant AML/CFT regulations and standards such as those set by the FATF is required. Experience working with baseline surveys, statistics, data collection and analysis is desirable. Recent experience in using World Bank AML/CFT risk assessment tools and methodology is desirable. Strong facilitation, communication and report writing skills is desirable.

Languages English and French are the working languages of the United Nations Secretariat. For this position, fluency in oral and written English is required. Knowledge of another United Nations official language is an advantage.

No Fee THE UNITED NATIONS DOES NOT CHARGE A FEE AT ANY STAGE OF THE RECRUITMENT PROCESS (APPLICATION, INTERVIEW MEETING, PROCESSING, OR TRAINING). THE UNITED NATIONS DOES NOT CONCERN ITSELF WITH INFORMATION ON APPLICANTS’ BANK ACCOUNTS.