Introduction
Last week I drew readers’ attention to the far more potent threat facing tax evaders and money launderers operating in and through Guyana, than the activities of the Financial Action Task Force (FATF) and its regional counterpart, the Caribbean Financial Task Force (CFATF). That threat is embedded in the US Foreign Account Tax Compliance Act (FATCA). Remark-ably, to date, this act has drawn little or no public comment from our governmental and private sector communities even though a US Treasury Notice has been recently issued stating that it is coming into effect on July 1, 2014. This silence is in contrast to the public furore over the legislative amendments jointly developed by the CFATF and the Government of Guyana.
FATCA casts its net far and wide as it targets all US tax evaders, a category that obviously includes both citizens and legal residents. From what can be observed this grouping includes a considerable number of persons in the Guyanese-American community who have been ‘transacting’ and moving regularly between the United States and Guyana. Their present reality is that, unreported and un-taxed financial and other assets (as well as income) arising out of Guyana, now clearly falls under the active purview of the US Internal Revenue Service (IRS).
The reason for government turning a blind eye to the FATCA threat might very well be trepidation on its part. I personally believe, however, the government realizes that it is easier for it (or indeed any other government) to game its opposition as well as regional and international organizations than it is to do the same against a resourceful big power.
Drop-dead date
Reverting to the discussion of developments since November 18, 2013, readers should be reminded that the frequently referred to drop-dead date, by which the legislative amendments before the Select Committee of the National Assembly had to be passed coincided with the holding of the Bahamas plenary meeting of the CFATF. Following that meeting the Attorney General is reported in the media as having baldly stated: “Guyana is blacklisted.” A Kaieteur News report on November 26, 2013, seemed to be expressing a bit more prudence on his part when he is quoted as saying also: “what sanctions are going to be imposed on Guyana I am not sure.”
The remainder of this column will discuss public reaction (mainly on the part of the government and the CFATF) to Guyana having missed the drop-dead date.
Following its meeting at Freeport, Bahamas, the CFATF issued a public statement on November 20, 2013, under the following rubric:
‘Jurisdictions with strategic Anti-Money Laundering and Countering the Financing of Terrorism and Proliferation (AML/CFT) deficiencies that have not made progress in addressing the deficiencies or have not complied with the Action Plan developed with the CFATF to address these deficiencies.’
This statement goes on to refer separately to two CFATF member states: Belize and Guyana.
CFATF’s statement (Guyana)
The statement on Guyana begins by recounting that the proximate origin of Guyana’s present problematic circumstances goes back to November 2011, when CFATF brought to the attention of its members: “The strategic deficiencies in Guyana’s AML/CFT regime and indicated that rectification measures be set in train.” The rectification measures it referred to were encapsulated in an Action Plan, which CFATF had jointly developed with the Government of Guyana (this plan was discussed in previous columns in this series).
The statement then goes on to recount that, because of delays in taking action after November 2011, CFATF had issued an earlier public statement in May this year (2013). That earlier statement urged Guyana to take steps towards improving its compliance regime by implementing the legislative amendments/reforms which were later sent to the Special Select Committee as well as the other recommended actions contained in the Action Plan which was referred to above.
CFATF’s recent public statement of November 20, in effect reports its ruling based on the Bahamas meeting. That ruling is: as a result of Guyana’s continuing strategic deficiencies and “not meeting the agreed timelines in its Action Plan, Members of CFATF are therefore called upon to consider implementing counter measures to protect their financial systems from the on-going anti-money laundering and terrorist financing risks emanating from Guyana” (my emphasis).
To remedy this situation CFATF requires Guyana to 1) pass the relevant legislation and 2) implement all the outstanding issues stated within the Action Plan, including a) fully criminalizing money laundering and terrorist financing offences; b) addressing all issues in regard to beneficial ownership; c) strengthening the requirements for reporting suspicious transactions; international cooperation; confiscation of terrorist assets; and d) fully implementing all related United Nations conventions (for example, the Palermo Convention).
Government reaction
In the context of this elaboration of CFATF’s position, let us examine government’s reaction to it. Consider first the Attorney General’s statements, especially since he has been the principal government representative at recent CFATF meetings. As noted above he initially described the CFATF’s actions as “blacklisting Guyana,” even though he did go on to report he was not sure what actions would follow! He has, however, continued to give dire warnings about the negative impacts of the failure of the opposition in the National Assembly to support the legislative amendments. He has kept alive the option of the government returning the “legislative amendments” to the National Assembly, which it did this month (December 2013), despite its earlier defeat. He has also indicated a new drop-dead date of May 2014! This is in fact the date on which CFATF has publicly indicated it would send on the Guyana situation to the FATF’s International Coopera-tion Review Group (ICRG), for its consideration.
As would be expected, next to the Attorney General’s office, the Ministry of Finance spokespersons have been the most vocal on this matter. Their responses will be addressed next week, as I bring to an end this series of columns on money laundering.
