A recommendation by the Financial Intelligence Unit (FIU) in 2019 for a high-level probe of gold trading in light of concerns about commingling with Venezuelan ore appears to have been ignored by the then APNU+AFC government.
When asked yesterday whether he was aware whether any of his recommendations made to senior government officials had been acted upon, FIU Head Matthew Langevine told Stabroek News not to his knowledge.
“The FIU would have made the recommendations….A lot of them you would see probably had not been acted on as yet but that aspect of it is outside of the purview of the FIU. To my knowledge it doesn’t appear so,” Langevine said.
The ignoring of recommendations of the FIU would raise questions about whether it was being taken seriously.
There has been renewed interest in the gold trade following the disclosure in Stabroek News that the Guyana Gold Board (GGB) is currently investigating allegations made to the Minerals Grievance Platform (MGP) that local large-scale gold trader, El Dorado Trading is connected to illegally sourced Venezuelan gold, a claim the company has denied vehemently. Following the allegation, the Royal Canadian Mint (RCM) has suspended the intake of El Dorado gold from the GGB until further notice.
It is unclear whether the PPP/C government will take up the FIU recommendations.
Langevine spoke to Stabroek News to clarify figures contained in a report in yesterday’s edition (see other story on page 10) in relation to the trade in gold and foreign currency.
He said that the FIU has received “suspicious transaction” reports from within the gold sector and the information was passed on to the Special Organized Crime Unit (SOCU) to investigate, wherever necessary.
During a telephone interview yesterday, Langevine told Stabroek News that the FIU does not disclose details about ongoing investigations. However, he noted that the unit has received a number of reports of “suspicious transactions” related to entities within the gold sector.
These reports, according to Langevine were reviewed and analyzed and information was shared with SOCU, wherever required.
“….We have received suspicious transaction reports, which are reviewed, analyzed and information where necessary shared with SOCU from within the gold sector,” Langevine said.
SOCU had been hamstrung for several years by internal scandals and personnel changes. It is unclear what action it would have taken on the FIU information.
The FIU had recommended in 2019 that a high-level team be established to conduct a comprehensive review of the trading of gold, amid concerns that Venezuelan gold was filtering into the local market in 2019 causing the Guyana dollar to depreciate.
The FIU report in the second half of 2019 had also urged that action be taken against illegal cambios.
The FIU report, which was seen by Stabroek News was one of several which were presented before the final draft, Langevine said.
He added that the figures presented in the draft report differs “significantly” from those in the final report. However, the recommendations remain the same.
In a separate statement yesterday, Langevine expressed concern that the draft report had been included in a Stabroek News article.
“Our concern commences with the fact that the content of the article appears to be linked to a confidential report shared with a high level committee established in 2019 by the then Minister of Finance (Winston Jordan) to review the factors that may be contributing to sudden and unusual movements in the exchange rate for United States Dollars. The FIU’s participation at that forum was based on our mandate specified in the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT Act) Section 9(5) which provides for the Director (of the FIU) to advise the Minister responsible for Finance on matters relating to Money Laundering or Terrorist Financing, that may affect public policy and national security. The Committee included very senior representatives from the Bank of Guyana, Guyana Revenue Authority, Guyana Gold Board, Ministry of Finance, and the FIU. This report was not intended or expected to be in the public domain. Additionally, the article was published without any known attempt to confirm the information purported to be emanating from the FIU, before it was published”, Langevine said.
He added that “The primary mandate of the FIU is to request, receive, analyze and disseminate information to the relevant law enforcement authority, with the ultimate aim of assisting to protect the country’s financial system and contribute to the fight against Money Laundering and Terrorist Financing. One of the main tenets of an effective FIU is to ensure information coming into its possession is maintained in a confidential manner and shared only with duly authorized competent authorities. This is expressively covered in the AML/CFT Act of 2009.
“This is a mandate that the Guyana FIU takes seriously, as it has implications for our ability to establish and maintain good working relations with other international FIUs.
“This is also important as we work to demonstrate the requirements needed to become a member of the Egmont Group, which is the International Association of FIUs. Membership to this group is a key requirement for Guyana and the FIU demonstrating overall effectiveness in the fight against Money Laundering and Terrorist Financing”.
Assumptions
In the second half of 2019 the FIU set about to determine whether there was information to support the assumptions that USD traded through the illegal roadside cambios and even legitimate cambios were being used to support illegal gold trade between Guyana and Venezuela during the period January 2018 – July 2019.
The cambio operations specifically reviewed in the analysis included Confidential Cambio (Mohamed’s Enterprise), El Dorado Trading (Tameshwar Jagmohan) and L. Mahabeer & Son Cambio (Latchman “Latchoo” Mahabeer).
The FIU also sought to determine whether the elevated exchange rate for USD was being influenced by businesses involved in the gold trade/export.
The FIU then posited a number of questions and recommended that “a high-level team be established to complete a more comprehensive review of the gold trading and Foreign Exchange trading markets to better understand its inner workings and implications. Action needs to be taken at addressing the issue of illegal Cambios including `roadside cambios’”.
The FIU also contended that the Central Bank should review the appropriateness of gold dealers/ traders being approved to operate licensed cambios.
Proactively involved
The FIU also recommended that the Central Bank and Law Enforcement should become “more proactively involved in addressing the various issues including undertaking of undercover operations to ensure all completed transactions are being declared/ reported by Licensed Cambios”.
The report called for improved signage and enforcement activities to be undertaken at ports of entry and exit to ensure all required movement of Foreign Exchange in or out of Guyana is appropriately declared.
It added that should law enforcement identify cases of persons moving cash frequently below the threshold, particularly persons travelling as a group where they may all have amounts just below the threshold, these should be reported to the FIU for analysis and investigation.
It further urged that cash smugglers when caught, should be prosecuted to the full extent of the law.
Another recommendation was that law enforcement should pay special attention to activities in the Port Kaituma area in Region One where it is believed that illegal trade of gold is occurring with USD cash being the preferred mode of payment.
“This illegal gold trade is reportedly being undertaken to provide desperately needed foreign exchange to Venezuela given the pressures being faced by their economy due to international economic sanctions, to which they are presently subjected”, the FIU said.
Based on discussions and recommendations at a multi agency law enforcement meeting, the FIU said that consideration should be given to the use of “Cash Detecting Dogs” to aid law enforcement’s efforts in addressing the problem of illegal cash smuggling from Guyana.
Stabroek News yesterday also contacted Governor of the Bank of Guyana, Dr. Gobind Ganga on the recommendations by the FIU. He declined to comment.
The FIU is an autonomous body responsible for requesting, receiving, analyzing and disseminating suspicious transaction reports and other information relating to money laundering, terrorist financing or the proceeds of crime. It was established under the Anti Money Laundering and Countering the Financing of Terrorism Act (AML/CFTA) 2009 and its Regulations.
