During the past week or so, various stakeholders expressed concerns publicly about the delay by the National Assembly to agree on the amendments to the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Act 2009 to bring it in line with international standards and to avoid sanctions being imposed. They urged the political parties to set aside their differences and in the spirit of goodwill agree on a compromise. The diplomatic community in Guyana, CARICOM and the Organisation of American States joined in the call. Despite this, the Parliamentary Select Committee for a third time failed to reach agreement on the amendments.
Background to the amendment Bill
Guyana became a member of the Caribbean Financial Action Task Force (CFATF) in 2002. CFATF’s first evaluation report issued in October 2006 highlighted the absence of legislation on money laundering. In response, the Government tabled draft legislation in the National Assembly in January 2007. The Assembly referred it to the Select Committee, and it took more than two years for the legislation to be approved.
The third evaluation report dated 25 July 2011 was very critical of the Act. The main conclusion was that Guyana’s legislation needed to be overhauled to conform to the standard recommendations used to evaluate countries’ efforts to combat money laundering and terrorist financing. CFATF informed Guyana that the steps it had taken were minimal and that it remained in “expedited follow-up”. 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. It was 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 Act. 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. However, it was not until 7 November 2013 that the Minister presented reports for 2011 and 2012 to the Assembly.
On 7 May 2013, almost ten months after the CFATF drew attention to the deficiencies in the Act, the Government tabled the related amendments. The Assembly referred them to a Select Committee for detailed scrutiny and reporting to the Assembly. This approach was consistent with the action taken when the Act was passed.
The Government’s position
The Government was unhappy with the decision to refer the matter to the Select Committee. It wanted an urgent passage of the amendments as presented, contending that: (a) they addressed all the concerns that the CFATF had raised; (b) the latter had dictated the contents of the amendment Bill; and (c) if the amendments were not approved by the 27 May 2013 deadline, Guyana would be blacklisted. CFATF has since clarified that draft versions of the legislation were submitted to it for review to assess compliance with the outstanding recommendations, and that a response was sent to the Government. It was therefore not a case of CFATF dictating the contents of the proposed amendments.
APNU’s position
APNU felt that the opportunity should be taken to carry out a more rigorous and comprehensive review of the legislation in view of the following:
● Guyana is a transshipment point for cocaine destined for North America, Europe and the Caribbean;
● Money laundering is linked to trafficking in drugs, firearms and persons as well as corruption and fraud;
● Money laundering appears to prop up the economy;
The proceeds from this illicit activity, estimated to be at least 20 per cent of Guyana’s GDP, are used mainly for money laundering purposes;
● The estimated the size of the informal economy is 40-60 per cent of the formal economy;
● A significant degree of unexplained wealth is being flaunted in front of the eyes of Guyanese with impunity; and
● There have been no significant arrests and/or prosecutions since the FIU was established.
The Government was, however, unwilling to extend the Select Committee’s work to other aspects of the legislation and was concerned only with the deficiencies identified by CFATF. Only last week, Guyana once again made the international news following the arrest in the United States and Italy of at least two dozen persons attached to criminal networks in New York, Mexico, Southern Italy and Malaysia for planning to ship 1,000 lbs of cocaine from Guyana valued at US$1 billion. Quite recently also, Guyana reportedly joined Mozambique at the bottom of the list of 55 countries that FATF had evaluated in terms of their anti-money laundering efforts.
APNU’s position was that it would not be rushed into passing the amendments to the Act. If the deadline was not met, it would be the Government’s fault since it had adequate time since July 2011 to prepare the amendments. APNU had stated that it would not support the Bill because the Government withheld information it was requested to share with the Opposition. That information was contained in a letter dated 10 April 2013 from the CFATF addressed to the President. The letter referred to several warnings and references to earlier notifications of the precarious position to which Guyana was 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. APNU also indicated that it would not support the amendments unless the President assents to a number of Bills that the Assembly had passed.
AFC’s position
The Alliance For Change (AFC) 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 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.
With the extension of the deadline for the nomination of candidates to serve on the Commission, as well as bitter dispute over whether Cabinet should continue to be involved in the procurement process, it is unclear whether the AFC will insist on this precondition.
Latest position as regards the amendments
It appears that the Committee has reached some agreement based on concerns raised by the combined Opposition. However, legal drafting of the changes agreed on will take some time. Meanwhile, there are a number of contentious issues for which agreement had not yet been reached. These include:
Empowering the Police and the Customs and Anti-Narcotics Unit to seize sums in excess of $2 million in cash in the possession of any individual if they suspect that a financial crime has been committed;
Involvement of the Assembly in the appointment of the FIU Director;
Removal of what the Opposition deems to be excessive powers in the hands of the Minister of Finance and the Attorney General in connection with seizures. They are politically exposed persons who should distance themselves from decision-making in relation to the implementation of the Act; and
Creation of an Anti-Money Laundering Authority.
The Government has suggested that in order to meet the deadline, whatever amendments agreed upon so far should be passed in the Assembly, and that the other proposed amendments could be dealt with later. While this is a reasonable demand, it has not found favour with the Opposition. One suspects that this was due to the several instances where Government reneged on its promises. In other words, the Opposition feels that the Government should not be trusted to keep its word. As regards the involvement of the two Ministers, the Government’s contention is that this is consistent with what prevails in other countries.
According to the Advisor on Governance, FATF might select Guyana for review of its progress to upgrade its legislation. This could result in sanctions being imposed. There is also the threat of sanctions when the Caribbean Financial Action Task Force (CFATF) meets in May 2014. The FATF meeting took place last week, and Guyana was not selected for review. Instead, it accepted a recommendation that CFATF will review Guyana’s latest efforts to amend its legislation, including a plan of action to correct the deficiencies identified, and report to CFATF’s plenary session in May 2014. In this regard, Guyana is required to file a report with the CFATF by 28 February. FATF also emphasized that its decision of November 2013 remained unchanged and that no further statements would be issued. This was no doubt in response to the hysteria that was created over the last few weeks about statements attributable to both the CFATF and FATF and the threat of blacklisting.
To be continued –
