The police are investigating Equity Bank following the loss of over Shs 3 billion by Canadian national Clifford Potter in a fraudulent gold transaction, allegedly orchestrated by Stephen Bairukanga, a suspected gold dealer.
In a letter addressed to the Managing Director of Equity Bank, SSP Ayub Waisswa of the Criminal Investigations Directorate (CID) requested clarification on the circumstances surrounding the case. The CID holds one of the two accounts linked to Bairukanga, raising questions about whether this incident constitutes money laundering, a criminal offense under Ugandan law.
Between 2016 and 2019, it’s alleged that Clifford Max Potter and others deposited approximately USD 1,000,000 into Bairukanga’s account under a fraudulent gold scheme. The money was quickly withdrawn from the account, and it is said that Equity Bank failed to report these suspicious transactions to the Financial Intelligence Authority (FIA), violating anti-money laundering regulations.
Through Muwema & Co. Advocates, Potter has demanded that both Equity Bank and Stanbic Bank refund his money. His legal team claims that had the banks conducted proper due diligence, they would have identified Bairukanga as a fraudulent gold dealer.
Potter and others are said to have transferred substantial sums to Bairukanga’s accounts with promises of receiving gold. However, despite the transfers, Bairukanga never delivered the gold. A total of $986,115 was deposited into Equity Bank, and $670,123 was transferred to Stanbic Bank accounts. Both sums were later withdrawn under questionable circumstances.
A senior official from Equity Bank, speaking anonymously due to restrictions on commenting about customer transactions, stated that the bank was not directly involved in the issue, as the transaction was between private parties. However, the bank’s failure to report suspicious activities has raised concerns.
Potter’s lawyer, Fred Muwema, argued that the banks have a legal obligation to verify suspicious transactions and report them to the FIA. He added that had the banks conducted proper checks, they would have identified Bairukanga’s fraudulent activities, preventing the money from being withdrawn.
Muwema emphasized that under the law, when a bank fails to conduct due diligence, they are liable for any losses resulting from such transactions. While the bank claims the matter is between two individuals, it is clear that financial institutions play a crucial role in preventing illicit transactions.
This case is not unique. There have been previous investigations involving foreign nationals losing large sums of money in similar fraudulent gold schemes, with the promised gold never materializing. The police are continuing to investigate the extent of the scam and whether other individuals were involved in the operation.
The incident has prompted concerns about the role of financial institutions in preventing fraud and money laundering in Uganda, especially in cases involving large sums of money and international transactions.
