This column had carried several articles on Guyana’s efforts to address the issue of anti-money laundering and the prevention of the financing of terrorism. In the light of the latest amendment to the Anti-Money Laundering and Countering of the Financing of Terrorism (AML/CFT) Act 2009, I have decided to provide a consolidation of Guyana’s efforts to date, which I hope readers will find interesting.
In 2002, Guyana became a member of the Caribbean Financial Action Task Force (CFATF) which is the regional body of the Financial Action Task Force (CATF), headquartered in Paris, France. CATF is an inter-governmental body established in 1989 to set standards and promote effective implementation of legal, regulatory and operational measures for combatting money laundering, terrorist financing and other related threats to the integrity of the international financial system. It has developed a series of recommendations that are recognised as international standards for combating money laundering, terrorist financing and proliferation of weapons of mass destruction.
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 in the form of the Anti-Money Laundering and Countering of the Financing of Terrorism (AML/CFT) Act 2009.
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. CTATF 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 with 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.
First amendment to the AML/CFT Act
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 was, however, unhappy with the Assembly’s decision. 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 had 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.
The then Opposition 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 size of the informal economy was 40-60 per cent of the formal economy;
- A significant degree of unexplained wealth was being flaunted in front of 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. Around the same time, Guyana once again had 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. Guyana also reportedly joined Mozambique at the bottom of the list of 55 countries that the FATF had evaluated in terms of their anti-money laundering efforts.
The Opposition’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. The Opposition 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.
The Government had 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. The suggestion did not, however, find favour with the Opposition on the grounds that, based on past experience, the Government could not be trusted to keep its word. A key concern was that the Bank of Guyana, the FIU, the Special Organised Crime Unit, and the Office of the Director of Public Prosecutions needed to be adequately equipped and provided with the desired level of autonomy to effectively discharge the functions assigned to them by the Act. Fuelled by the thought that doomsday had arrived, the business community, through their elected representatives, went full gear into a panic-stricken mode in support of the Government’s position that caused quite a hysteria among the populace. Before any further action could have been taken, Parliament was prorogued, followed by its dissolution and the holding of fresh elections on 11 May 2015.
One of the first tasks of the new Administration was the tabling of the proposed amendments to the Act based on the position it had taken while in Opposition. The current political Opposition chose to boycott the event and therefore the Bill gained unanimous support from those legislators who were present. The amendments, which were assented to by the President on 10 July 2015, covers three main areas, namely: (a) the expansion and tightening of certain definitions, and the inclusion of new ones in the Interpretation Section of the Act; (b) the creation of an AML/CFT Authority which will act as a kind of Board to provide oversight of the operations of the FIU; and (c) new procedures for the appointment of the Director and the Deputy Director of the FIU.
The entire subsection 2(1) has been replaced, essentially to remove the role of the Attorney General in recommending to the Minister of Finance appropriate action in respect of any person or entity suspected of being involved in anti-money laundering activities and of violating the Act. The amendments now vest that responsibility with the Director of the FIU. In addition, the creation of an AML/CFT Authority removes ministerial control over the functioning of the FIU and places oversight responsibility in the hands of the AML/CFT Authority, comprising ten members appointed by the National Assembly by simple majority on the recommendation of the Parliamentary Committee on Appointments. The key responsibility of the Authority relates to providing advice to the FIU of a general nature as to policies that need to be followed in the exercise of its functions. Specific responsibilities include:
- Ensuring that the work of the FIU is conducted in an efficient, fair and cost effective manner in accordance with policy guidelines determined by the Assembly and the Minister;
- Ensuring, in the national interest, the performance of the FIU accords with our international obligations and commitments;
- Monitoring and reviewing compliance with all relevant legislation, policies and measures;
- Ascertaining the need for any legislation or amendments to existing legislation;
- Causing to be investigated any complaint, irregularity or mismanagement by the FIU, and proposing remedial action; and
- Assisting in the dissemination of information on the work of the FIU, and enlightening the public of the need for cooperation with the FIU.
Under Section 8 of the Act, the Minister of Finance was responsible for appointing the Director of the FIU. This section has now been amended to provide the Assembly by simple majority with the authority to appoint the Director and the Deputy Director, based on a recommendation of the Parliamentary Committee on Appointments.
Second amendment to the AML/CFT Act
The second amendment was assented to by the President on 6 January 2016 and provides for, among others, a new definition for beneficial ownership; procedures for the freezing of property of a terrorist or terrorist organization; and amendments of three other Acts referred to in the Schedule, namely, the Securities Industry Act, the Co-operative Societies Act and the Insurance Act.
Latest amendment to the AML/CFT Act
The latest amendment to the Act, which was passed last week, continued in the same vein as the two previous amendments, including: (a) the tightening of the language in the Principal Act; (b) the requirement for all financial institutions to adopt effective risk-based procedures relating to wire transfers; (c) additional responsibilities of the FIU Director as regards funds or assets of persons or entities suspected to have met the criteria set out in the United Nations Security Council Resolution 1267 and its successor resolutions, and the procedures to be followed for the freezing of those funds or assets; and (d) amendments to four other Acts contained in the Schedule, namely the Gambling Prevention Act, the Mutual Assistance in Criminal Matters Act, the Money Transfer Agencies (Licensing) Act, and the Companies Act.
The Opposition had wanted the related Bill to be referred to a Select Committee but the proposal was voted down. The former Attorney General contended that the previous Administration did everything it could to amend the Act but was constrained by its minority status in the Assembly; and that it had taken all administrative actions. He also lamented the fact that since the beginning of the year the FIU has been without a Head.
The current Attorney General responded by stating that the Government inherited a situation of great disadvantage. He cited three of the four CFATF public statements published to date in which Guyana featured. Those statements (dated 30 May 2013, 20 November 2013 and 29 May 2014) identified Guyana as a jurisdiction with strategic AML/CFT deficiencies that has not made sufficient progress in addressing the deficiencies or has not complied with its action plan developed with the CFATF to address the deficiencies. In the fourth statement dated 25 November 2015, the only country that featured was Suriname. The Attorney General further stated that to date the number of unimplemented recommendations was reduced to one, and this has been addressed in the latest amendment to the Act. He indicated that Guyana is now in a position to exit the FATF review process upon application.
