Introduction
Over the last two weeks, there were some interesting exchanges between the Government and the Opposition political parties on the proposed amendments to the Anti-Money Laundering and the Countering of Terrorism (AML/CFT) Act 2009. The Government is keen to have the legislation passed before 27 May 2013 at which date the Caribbean Financial Action Task Force (CFATF) will be meeting in Nicaragua to discuss, among others, Guyana’s progress in strengthening its money laundering legislation. The FATF is an inter-governmental body with responsibility for developing and promoting national and international policies to combat money laundering and terrorist financing.
Today, we examine Guyana’s efforts to address the issue of money laundering and terrorist financing, culminating in the presentation of the amendment Bill in the National Assembly.
Background to the amendment Bill
Guyana became a member of the CFATF in 2002. Its first evaluation report issued in October 2006 highlighted the absence of legislation on money laundering. That apart, the widely held view was that:
● Money laundering was linked to trafficking in drugs, firearms and persons as well as corruption and fraud;
● The scale of money laundering was considered to be large relative to the size of the economy;
● The estimated the size of the informal economy was 40-60 per cent of the of the formal economy; and
● Drug trafficking and money laundering appeared to prop up the economy.
The US Department of State 2006 International Narcotic Control Strategy Report considered that Guyana was a transshipment point for cocaine destined for North America, Europe and the Caribbean due mainly to poor economic, social and political conditions. The estimated annual income from this illicit activity was at least US$150 million, equivalent to 20 per cent of Guyana’s reported gross domestic product.
In response to the evaluation report, the Government tabled draft legislation in the National Assembly in January 2007. The Assembly referred it to a Parliamentary Select Committee, and it took more than two years for the legislation to be approved. There was earlier legislation dating back to 2000 that had not been operationalised for reasons not publicly known.
The third evaluation report on Guyana dated 25 July 2011 was very critical of the AML/CFT Act, and the main conclusion was that Guyana’s legislation needed to be overhauled to bring it in conformity with the standard recommendations used to evaluate countries’ efforts to combat money laundering and terrorist financing. Recent media reports indicated that Guyana was told that the steps it had taken were minimal and that it remained in “expedited follow-up”, meaning that it is required to report at every meeting of the CFATF on progress made. In particular, there was concern that the Financial Intelligence Unit (FIU) had only the Director, whereas it is to be staffed also by a lawyer, an accountant and such other officials trained in investigative work, to enable the Unit to carry out its mandate as envisaged by the Act. It is therefore not surprising that the FIU did not produce any periodic reports nor were there any prosecutions to date.
The FIU was established in late 2003 to monitor and apprehend businesses and individuals involved in filtering the proceeds of crime into the economy. It is the backbone to the AML/CFT Act since 30 of the 116 sections relate to its functioning. In particular, the FIU is required to submit to the Minister of Finance an annual report of its operations, performance and financial affairs, including amounts paid into the Consolidated Fund from proceeds of the forfeiture and confiscation of assets. The financial aspect of the report is to be audited and reported on by the Auditor General, and the annual report is to be laid in the National Assembly within one month of its receipt by the Minister. Needless to mention, none of this happened.
On 7 May 2013, the Government tabled the amendments in the National Assembly to address the shortcomings in the AML/CFT Act highlighted in the third evaluation report. The Assembly referred them to a Select Committee for detailed scrutiny and reporting to the Assembly. This approach is consistent with the action taken when the AML/CTF Act was passed in 2009, given the complex nature of the legislation and the issues at hand.
Reaction to the tabling of
the proposed amendments
The Government was unhappy with the decision to refer the draft legislation to a Select Committee. Its position is that if the amendments are not approved by the 27 May deadline, Guyana will be blacklisted. This will make it extremely difficult to move funds in an out of Guyana for legitimate business purposes. The Alliance For Change (AFC), however, stated that it would withhold support for the Bill unless: (a) the Government takes concrete measures to activate the Public Procurement Commission; and (b) the President assents to the two Opposition-initiated bills. The AFC’s position was that:
The proceeds from corrupt activities facilitate money laundering;
The work of the Commission is likely to reduce significantly the perception about the levels of corruption in Guyana; and
The same urgency is needed for the appointment of the members of the Commission.
In 2001, the Constitution was amended to provide for the establishment of the Procurement Commission but after 12 years, the Government has taken no steps to appoint its members. At a recent press conference, Minister Irfaan Ali hinted that the Government wants to nominate three out of the five members, including the Chairman, a move that the Opposition-controlled National Assembly is likely to resist. The composition of the Procurement Commission should mirror that of the Public Accounts Committee (PAC). The Minister erred in referring to the Government side voluntarily giving up the chair of the PAC whereas it has been a long-standing practice for such a position to be held by the Opposition. After all, the PAC scrutinizes the expenditure of the Government. The same principle applies to the Procurement Commission, which will have to oversee the award of contracts for goods and services and the execution of works, estimated at approximately 70 per cent of the national budget.
APNU’s position is that it will not be rushed into passing the amendments to the AML/CFT Act, and if the deadline is not met, it will be the Government’s fault since it had adequate time since July 2011 to prepare the amendments. The latest information is that APNU will not support the Bill because the Government withheld information it was requested to share with the Opposition. That information is contained in a letter dated 10 April 2013 from the CFATF addressed to the President, the contents of which are very damning. The letter referred to several warnings and references to earlier notifications of the precarious position to which Guyana is exposed since November 2012 as well as assurances given by the Attorney General, the Minister of Finance and the Head of the Presidential Secretariat that the issues raised were being dealt with expeditiously. As a result, Guyana was required to submit a comprehensive report to the May 2013 CFATF Plenary by 6 May 2013. It is not clear whether the Government issued such a report.
The actual amendments
The proposed legislation contains 17 sections of amendments to the principal Act and the insertion of a new section 68A. These are:
Definition of beneficial ownership and the broadening of a number of other definitions such as assets, negotiable instruments, property, property liable for confiscation, proceeds of crime, and terrorist financing;
Criminalising any act of assisting a person involved in the commissioning of money laundering offence to evade legal consequences as well as illicit trafficking in stolen and other goods and smuggling;
The addition of telecommunications providers among agencies from which the FIU may request information;
Requiring reporting entities to undertake additional responsibilities in relation to opening new accounts, due diligence, making available records, reporting possible terrorist financing, and monitoring AML/CTF compliance; and
Freezing of funds of terrorists, terrorist groups or terrorist organizations designated as such by the UN Security Council.
In addition, section 18 amends eight other Acts relating mainly to gambling prevention, money transfer, foreign exchange, and beneficial ownership of companies.
Conclusion
There is no doubt that the amendments to the AML/CFT Act are necessary to bring it in line with international standards. However, it boggles the mind why under the existing legislation the FIU was not strengthened at least since 2009. We, however, have to be careful into rushing to pass legislation at the request of the international community when in fact we have no intention of implementing the detailed requirements. In such a situation, the legislation remains at best a statement of intention.
If we are serious about dealing with money laundering, we must display equal seriousness in addressing the issue of corruption since it aids money laundering. The Government should therefore immediately appoint the members of the Public Procurement and Integrity Commissions, and the Opposition given the necessary time to review carefully the proposed amendments. It is too important a task to rush for the sake of meeting the deadline. I am sure the FATF will display understanding in this regard, notwithstanding the undue delay in bring the amendments to the National Assembly.
