The Anti-Money Laundering Bill: all is not lost

By Clinton Urling

All is not lost in the wake of the government’s failure to secure the passage of the Anti-Money Laundering Bill in the National Assembly though it will require mature and adaptive leadership on the parts of both the government and the opposition if we are to avoid the drastic economic consequences that could well accrue to the country’s economy.

By mature and adaptive leadership is meant a shift from the current rigid positions on either side. This would involve engaging in discourse that leads to concessions and compromises.

Prior to the defeat of the Bill in the House two Thursdays ago, many people remained unconvinced about the potential consequences for the country’s economy. In fact, the view had been expressed that the government and the private sector were indulging in aggressive scare-mongering in order to pressure the political opposition into supporting the legislation. Nothing could be further from the truth.

The experiences of St Kitts and Nevis and the Cook Islands, for example, are instructive. In 2000, both territories appeared unconvinced about the severity of suffering blacklisting by the Financial Action Task Force (FATF). These territories assumed – wrongly as it turned out – that the blacklisting advisory was more ‘bark’ than ‘bite’. This was premised on the fact that FATF’s blacklisting creates no obligations under international law and that the multilateral grouping had no authority to impose direct sanctions or legal actions. However, while that is true, they underestimated the actions that would have been taken by member and non-member states of FATF, particularly, the US, Canada and other OECD countries. For instance, the United States Financial Crimes Enforcement Network (FinCEN), an arm of the US Treasury Department, issued advisories to its accounting, insurance, banking, and legal firms flagging both countries within one month of blacklisting. As a result, large financial services firms in the US withdrew their services from these jurisdictions. Other firms were simply not prepared to expend additional resources providing the additional scrutiny required to effect wire transfers through correspondent banking relationships. They too terminated their relationships with the delinquent territories. More than that, the damage to the images of the two territories as a result of the blacklisting caused foreign investors to rethink their investment plans in both territories as a result of the ‘high hurdles’ that had come to be associated with conducting critical  international financial transactions.

Within a few months, both territories were reeling from the economic damage caused by the blacklisting. By 2002 and 2004 respectively St Kitts and Nevis and the Cook Islands had implemented the necessary legislative reforms. In the case of St Kitts the Prime Minister had cause to lament the “massive threat to our economic survival” posed by blacklisting, noting that: “the impact of blacklisting goes well beyond the offshore financial sector… No foreign investor would want to invest in a hotel, manufacturing or other real sector project in a country that does not have the capacity to facilitate the payment of dividends or repatriation of capital through normal banking processes.”

Whether or not FATF proceeds to grey-list or blacklist Guyana for not meeting the legislative requirements, the two aforementioned examples illustrate that the consequences of delinquency can be severe. On the other hand, those consequences can be reversed if the affected country takes the necessary steps to implement the FATF recommendations, which can be done even after a blacklist advisory has been put in place.

In the Wednesday November 13 edition of Stabroek News, Speaker of the National Assembly Raphael Trotman reaffirmed this when he noted that the Bill could be reintroduced if there is a pact between government and opposition parliamentarians.

The government representatives meet at a plenary session with the Caribbean FATF authorities in the Bahamas during November 18-21 to report on progress made since the last review was done. It is expected that the government will make the case to the Caribbean FATF to put off and delay issuing an advisory that Guyana is a non-compliant country. Similarly and commendably, our private sector is expected to aid with a petition to the CFATF authorities in the same vein.

These developments notwithstanding, the political parties in the National Assembly will still be required to put the nation’s interests first and arrive at a position where the critical legislative changes can be made.

Clinton Urling is President of the Georgetown Chamber of Commerce and Industry