Well-orchestrated
As stated last Sunday it was my intention to bring the series of columns on money laundering to an end. As previously indicated, the columns have been based on a memorandum on the subject, which I had submitted to the Special Select Committee of the National Assembly on October 10. Since that submission, however, there have been several striking developments, which clearly warrant further comment. These include 1) the sudden termination of the work of the Special Select Committee and the decision by its PPP/C members on their own to table a report on behalf of the whole committee in the National Assembly. (This tabled report has been since rejected by the National Assembly.) 2) the issuance of a Notice by the US Treasury stating it is taking steps “to curtail tax evasion in the Caribbean and other places” under the Foreign Account Tax Compliance Act (FATCA).
Thirdly, there has been what some persons refer to as the “well-orchestrated/choreographed” publication of full-page statements in the print media by private sector and financial bodies. Those publishing such statements include the Private Sector Commission; the Guyana Association of Bankers; the Insurance Association of Guyana; the Guyana Manufacturers and Services Association; and the Aircraft Owners Association.
Altogether these statements seem to studiedly raise grave fears and even the spectre of the cataclysmic collapse of Guyana’s financial system, economy, and livelihoods, if the legislative amendments that were before the Special Select Committee had not been immediately passed into law. I must confess my surprise at observing business firms, and in particular financial ones, contributing towards generating an atmosphere of fear, confusion, panic and public alarm. Readers would know that historically such utterances have often turned out to be devastating for businesses founded on trust and confidence. It is somewhat akin to shouting “fire” in a crowded place. Such actions have frequently led to disastrous runs on firms.
One newspaper has reported: “The private sector and insurance have already expressed worry publishing whole page advertisements in the dailies over the fallouts of delay” (KN, October 22). On the previous day, KN had reported the view expressed to them was: “Guyana totters on the brink of financial disaster.” Further, The Insurance Association claimed the present situation, “threatens the viability and integrity of the financial sector and the well being of the nation.” Indeed spokespersons for the local banks similarly reported that “Citibank (and others) have severed relations with one or more unnamed local banks.” The Bankers’ Association expressed the view that, “By January 1, next year, Guyana could very well end up being banned from sending monies and bank drafts overseas.”
The end of business as usual
To suggest, as these statements seek to do, that money laundering in Guyana is a problem of recent vintage, which is attributable to the sloth in the deliberations of the Special Select Committee on the legislative amendments before it, is utterly ridiculous. Guyana’s money laundering problems have had a long gestation, going back at least a decade ago to when Guyana joined the Caribbean Financial Action Task Force (CFATF). The truth is that recent happenings are the proximate and not the real causes behind the worrisome money laundering, financing of terrorism and arms proliferation situation in Guyana.
What is perhaps most disturbing of all in the present circumstances is the underlying expectation behind the published statements that the private sector and financial businesses can continue with business as usual situation going forward. The grim reality is, with or without the legislative amendments being approved, surveillance of all Guyana’s cross-border transactions will be decisively stepped up, whether these are related to trade, investment or other financial dealings. Readers may well ask: Why will this occur?
The answer is obvious; money laundering is taking place on a huge scale in Guyana. As indicated its tax evasion-driven underground economy has been estimated (using IMF methodology) as averaging about 61 per cent of official GDP for 2001-2008. Applying that estimated ratio to the GDP reported for 2012, we get the following values: $312 billion (if measured against GDP at current basic prices) and $355 billion (if measured against GDP at purchaser prices). Assuming further that Guyana falls within the higher range of illicit financial flows estimated for developing countries (8.6 per cent of GDP), if we apply this we get estimates of between $44 billion and $50 billion respectively, or US$220 million and US$250 million as the estimated value of laundered money that passes through the financial system. This suggests that about one-seventh of the underground economy in Guyana results in money laundering.
Attentive readers would realize that in Guyana, as indeed in all market-based economies, well over 90 per cent of laundered funds would pass through established financial businesses and private firms. These are, therefore, the very bodies that should be calling for up-to-date effective legislation and regulation against financial crimes. For this to obtain it would mean that in Guyana there can no longer be a situation of business as usual. I have in previous columns indicated the private sector, and particularly financial businesses, constitutes the choke points where the legislative amendments should concentrate.
Misinformation and rumour
As if to underscore how much misinformation and rumour surround this topic the Minister of Legal Affairs is reported as having stated “Trinidad and Tobago has mistakenly sought to implement measures against Guyana thinking that the country had been blacklisted by the Caribbean Financial Action Task Force (CFATF)” . Indeed the Kaieteur News report further stated Nandlall opined that this caused that country’s central bank to send advisories to the business sector that it should take the necessary counter measures against Guyana, and “as a result of this development for a few days now business transactions between the two countries were severely affected [and] many transactions have also come to an abrupt halt, and that in some cases credit cards have been recalled” (KN, October 20).
Next week I shall provide readers with the ‘landmark estimates’ of money laundering, which formed the basis of my estimates of money laundering in Guyana given above.
