Introduction
If perchance any reader might have had doubts about the serious intent of the United States as it opens a new front against tax evasion and money laundering, under its Foreign Account Tax Compli-ance Act, 2010 (FATCA), he or she should ponder the pointed remarks made by a Senior United States Treasury official (Robert Stark) on September 2013: “Offshore tax evasion is a significant contributor to the tax gap.” As a result of this, FATCA is designed: “To establish a process for foreign financial institutions (FFIs) to report information about their US account holders to the Internal Revenue Service (IRS).” The IRS has further stated its objective very clearly: “It is to catch tax evaders.”
When considered carefully, the implications of this development for Guyana are stunning in the extreme. To date, however, 
the government seems to be turning a blind eye to it, but make no mistake the Guyana-American community has been warned.
For this community “business as usual” will no longer be acceptable. This is the flank I referred to from which henceforth money-laundering in Guyana will be mainly attacked.
Criticisms
Last week I alluded to the fact that there have been several criticisms of this legislation (FATCA) in the United States, the Caribbean, and indeed elsewhere. Some of these criticisms reflect concerns about the cost effectiveness of FATCA actions, as it seeks to close the tax gap. Other criticisms reflect concerns about the complex administrative and reporting requirements this effort by the IRS imposes on FFIs. In response to these latter criticisms the US Treasury has simplified procedures by exempting reporting requirements for FFIs account holders under US$50,000.
The US Treasury has also stressed that its reporting requirements require no added data to those which should be held in any event under the “due diligence” and “know your customer requirements” of existing anti-money laundering legislation in all jurisdictions.
Yet other criticisms, particularly from within the US, claim FATCA penalizes and discriminates against US citizens living abroad.
This it is argued will encourage Americans resident abroad to give up their citizenship. In response the US Treasury has repeatedly reported it sees no signs whatsoever of this taking place and goes on to observe it is only requiring US taxpayers to follow US law and IRS rules and regulations. It suggests therefore that only those US taxpayers who are seeking to evade US taxes are likely to be in jeopardy.
There have also been some criticisms that the US Treasury is pressuring foreign governments and overreaching through burdening FFIs to do free work for the IRS, under threat of penalties.
To this, the US Treasury has asserted that it does not want FFIs to administer US tax laws and regulations. IRS requests will be strictly confined to reporting those US account holdings in their institutions to it. Some FFIs have complained this would entail extra costs.
Others have expressed concerns about the US seeking to implicitly widen the definition of tax fraud beyond that already applicable in their jurisdictions. Yet others fear that the US itself will no longer be seen as a tax haven and therefore lose business!
The drop-dead date
At this point let me invite readers to ponder events in Guyana since November 18, 2013. From their utterances, spokespersons for both the private business communities and governmental authorities had identified November 18 as the drop-dead date by which the legislative amendments and other specific requirements of the Caribbean Financial Action Task Force (CFATF) had to be operational in Guyana.
It was noted that on approaching the drop-dead date, the hysteria generated by the private business community had reached fever pitch.
I had warned in earlier columns that such action posed many dangers, chief among which would be the risk of precipitating panic runs on private businesses, particularly those engaged in financial activities.
I had even suggested that those actions came dangerously close to shouting fire in a crowded environment.
Since November 18, however, several public authorities, (including the Attorney General’s Office, the Ministry of Finance, and even spokespersons for the Presidential Secretariat) as well as the PPP/C seem bent on generating an equally alarming amount of political hysteria. Portraits of the impending doom facing the Guyana economy by the end of this year (2013) have been liberally added to the public discourse on countering money laundering and the risks of terrorist financing and proliferation.
No more business as usual
However, the main observation, which I have previously made, stands. There can never be business as usual in Guyana after recent events.
The cumulative effect of past misdeeds and failures to counter money laundering has reached a point where neither the global Financial Action Task Force (FATF), its regional counterpart (CFATF), nor indeed economic and financial analysts familiar with Guyana believe that the country has the capacity or political will to fulfil the combination of its global money laundering obligations and those forthcoming in relation to tax evasion, under the United States’ FATCA legislation (designed to come into force by July 1, 2014).
This therefore represents a classic illustration of the famous idiom: that in seeking to avoid the peril of the frying pan (CFATF’s action plan) we have to be careful not to jump into the fire (FATCA, 2010).
Those who are at risk of being caught up by FATCA go well beyond the organized criminal class, its allies, and even its critics.
In the remaining columns of this series I shall first, consider the positions taken by both the CFATF and the Government of Guyana since the drop-dead date. Afterwards, I shall devote some brief comments on the Financial Intelligence Unit (FIU), which stands at the centre of public debates on these matters.
