Playing with money laundering and terrorism legislation

Guyana joined the Caribbean Financial Action Task Force (CFATF) in 2002, twelve years after it was established in May 1990. The CFATF is an associate member of the Financial Action Task Force (FATF), the international body established in 1989 charged with examining countries’ money laundering techniques and trends, reviewing the actions which they had already taken, and setting out the measures that still needed to be taken to combat money laundering. Following the terrorist attacks of September 11, 2001, the FATF added terrorist financing to its mandate.

By 2002, Guyana had already passed the Money Laundering (Prevention) Act 2000 which granted to the Minister of Finance the discretion to appoint the Bank of Guyana or some fit and proper person as the Supervisory Authority for the Act. Favouring the latter course, some time in 2005 the Minister of Finance handpicked Mr Paul Geer to head a Financial Intelligence Unit located in the Ministry of Finance. Mr Geer’s experience included five years as head of the Guyana Bank of Trade and Industry, which he left abruptly – officially for personal reasons ‒ in a golden parachute and after a meeting of the bank’s Board of Directors.

Despite the allocation by the National Assembly for the FIU of more than two hundred and seventy-five million dollars since Mr Geer took up the position, the unit has had virtually no success in pursuing even the limited objectives of the 2000 Act. Not surprisingly then, Guyana’s reputation as a prosecutor of money-laundering has no gloss. Some have blamed the deficiencies of the Act but Mr Geer did not help the government’s case by his unavailability to meet the press or unwillingness to answer questions about the FIU.

Following some critical reviews of the by then limited 2000 Act and the country’s anti-money laundering efforts, the government introduced the Anti-Money Laundering and Countering the Finance of Terrorism Bill on June 4, 2007. After nearly two years and fifteen sittings of a Select Committee the National Assembly on April 30, 2009 passed the Bill. Reinforcing the perception that he was never serious about pursuing crime and its proceeds, then President Jagdeo took one hundred and seven days before he assented to the Bill on August 14, 2009. And then it took another 87 days before the publication of Order # 22 of 2009 to bring the Act into force.

The later Act was equally poorly administered prompting President Jagdeo some time in 2011 to publicly castigate the unit for its inability to meet even basic annual reporting obligations to the National Assembly. Put bluntly, the FIU of the 2009 Act and its predecessor Supervisory Authority under the 2000 Act have been disastrous failures, so much so that we probably could have done without them, without noticing their absence.

Rush, rush
For nearly four years and despite failing grades in periodic evaluations, very little was done by the unit or Mr Geer to advance the objects of the Act. Then two weeks ago, Mr Anil Nandalall, Attorney General caused to be published the Anti-Money Laundering and Countering the Finance of Terrorism (Amendment) Bill No. 12 of 2013. So great is the rush to have the Bill passed that Mr Nandalall promised that he would ensure that this one is not lost between his Chambers in Carmichael Street and the Office of the President. In Guyana where the act of every politician is not without extreme suspicion and where every citizen is a cynic, one wonders about the urgency with which Mr Nandalall is pursuing the Bill.

A big part of the problem is the government’s failure to heed criticisms of the 2007 Bill as drafted, and later its failure to act on recommendations of various reports by the Caribbean Financial Action Task Force on Guyana’s efforts at prosecuting money-laundering. I appeared before the Select Committee appointed by the National Assembly to review the Bill, pleading unsuccessfully for changes to that Bill. Subsequently, in a Business Page on September 20, 2009, I noted that having met on fifteen occasions, the committee with a government majority, could only be persuaded to make mostly cosmetic changes to the Bill as first presented.

It did not require a clairvoyant to recognise at that early stage that the legislation as passed was unsatisfactory and unworkable. Imagine placing in control of money-laundering in Guyana a single individual handpicked by the government outside of any transparent process, one who had operated without success for several years under the previous Act. In 2008-09, just about every Guyanese was aware that the courts in other jurisdictions had frequently exposed the huge amounts of narco-money flowing into and out of Guyana by well-known Guyanese. Yet, the FIU and other agencies concerned with illegally obtained gains, failed to prosecute even one of the perpetrators over the course of more than five years before the revised Act.

The Select Committee had the benefit of some very useful recommendations but obstinately ignored them all. Not surprisingly then that when the Caribbean FATF came to Guyana in 2011 to look at the efforts by the government to deal with money laundering, its report to the Council of Ministers on July 25, 2011 listed a litany of non-compliance and partial compliance with the forty measures and nine special measures by which countries’ anti-money laundering actions are evaluated. Indeed of the forty, Guyana was “compliant” with one and “largely compliant” with six. And on the nine special measures, including references to al-Qaeda and the Taliban, none was largely or fully complied with. Because of the low level of compliance, Guyana was placed on expedited follow-up for which there was to be a biannual report to the Caribbean FATF Plenary.

Despite the threat implicit in the expedited follow-up category of countries, Guyana took no action to deal with the overwhelming cases of non-compliance. Accordingly, after their visit to Guyana some months later, the evaluators reported to the CFATF Plenary in November that Guyana was rated partially compliant or non-compliant on 16 core and key recommendations and 25 other recommendations. With regard to the remaining twenty-seven recommendations, they rated Guyana as only partially compliant or non-compliant.

While conceding that the authorities in Guyana had commenced complying with some of the recommendations in the MER, it rated those efforts as “minimal.” The report went on to identify specific measures to be taken by the Guyana authorities “on a priority basis with timelines for the large majority of the recommendations that are presently under consideration.” It asked that information with regard to available statistics to demonstrate implementation needed to be submitted and that given its concerns, it recommended that Guyana remain in expedited follow-up and be required to report to the next Plenary in May 2012.” While short of being called a watch list, it was a polite F.

More inaction
Keeping to their timetable, and in order to report to the next Plenary, the Caribbean FATF returned to Guyana to review the actions taken to satisfy earlier recommendations and to recommend whether Guyana should remain on expedited follow-up or be placed on regular follow-up.

Again, the evaluators reported that the overall situation as noted in the first Follow-Up Report had changed little except for the substantial improvement in the level of compliance with one of the special recommendations. Again using the word “minimal,” the report called for specific measures on a priority basis with timelines for the large majority of the recommendations that were then under consideration. Again it called for the submission of information with regard to available statistics to demonstrate implementation. And again, the plenary body decided that Guyana should remain in expedited follow-up and be required to report to the next Plenary in November 2012.

In terms of Guyana’s compliance, the Report to the November 2012 Plenary was almost identical to the earlier reports. Again, the country was rated partially compliant or noncompliant on 16 core and key recommendations and 25 other recommendations. And of the remaining recommendations, Guyana was rated partially compliant or non-compliant on twenty-seven. Again the word “minimal” was used to describe Guyana’s efforts at compliance and again it was decided that Guyana be kept on the “expedited follow-up” list and “be required to report to the next Plenary in May 2013.”

Dangerously, the Government of Guyana waited until the last moment to address the deficiencies, aware that the country faces potential blacklisting for continued failure.

America, our convenient friend
Earlier this week it was reported that Mr David Granger, leader of the APNU on Friday met with the US Ambassador, the British and Canadian High Commissioners and the Head of the EU Delegation (ABCE countries) to discuss APNU’s concerns in relation to the Bill. A couple of weeks ago, the PPP/C would have screamed interference in Guyana’s domestic affairs. The government’s reaction this time is gratified silence. Not only is it in the interest of the Guyana government but for the ABCE countries, they want to prevent their investors from facing the consequences of another unfavourable report by CFATF.

It is perhaps idle to guess whether the opposition will support the amendments to an Act that remains structurally unsound. In my view the most fundamental weakness of the Act which has affected its ineffectiveness is embodied in section 8. That section provides for the appointment by the Minister of Finance of a director endowed with the power and functions of the Financial Intelligence Unit. In typical Jagdeo style that person can only be removed by the President even though he reports to the Minister of Finance.

We cannot be serious about the prevention of money laundering and countering terrorism and at the same time retain the structure of a single person having the discretion whether or not to pursue a suspected financier of terrorist activities or a narco-king. I would like to think that the ABCE countries would be very concerned at the prospects of the continuation of a law and a structure that are antithetical to the objectives of the legislation.

Whatever the merits of the technical amendments, the new parliamentarians will be looking for the first time at what is popularly called the Money Laundering Act. If they are to cast a meaningful vote, they need to understand the Act, its limitations and how and whether the amendments deal with those. And those in the opposition who were part of the old parliament would probably recall the dismissive response of the government with its majority in the National Assembly to what the opposition would have considered eminently sensible contributions. Faced with the embarrassment of another failure report from the CFATF the government may be willing to make concessions and accept some amendments from the opposition. However it will not easily give up its political control of the Financial Intelligence Unit, any more than it does over procurement. Form early o’clock, the opposition must establish some non-negotiables, including drastic changes to sections 8 and 9.

The shock and outrage being expressed by the government is hardly credible. There is no magic about May 27 when the CFATF returns and finds that the overnment has done nothing since its last three visits. Other countries in the Caribbean have suffered some consequences for persistent or serious non-compliance. The sky did not come down on them. It will not come down on us either, although we may find some inconveniences which we would prefer to avoid.

The decision to remit the Amendment Bill to Select Committee is a good first step. The committee must not allow the clock to dictate how money-laundering is dealt with in Guyana. A good job is far superior to a fast job and the committee must be thorough in its deliberations. Most importantly, it must set out as its objective the imperative that we have a competent, independent authority supervising an executive equipped to act against money-launderers and those who may find a hospitable environment in Guyana for money laundering and channelling terrorism financing.

Next week we will have a look at the CJIA expansion.

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