Written Submission to the Select Committee on the AML+CFT (Amendment) Bill 2013

Guyana’s managing of anti-money laundering activities has not been encouraging. A SN editorial to mark the third anniversary of the Money Laundering (Prevention) Act 2000 since its enactment described it as a “bear in hibernation”. Yet, the list of persons who pronounced on the Act at various stages included then Finance Minister Sasenarine Kowlessar who after the act’s assent announced that no decision had been made as to who would supervise the act; then President Jagdeo, who one year after the act was passed said no funds had been budgeted for its implementation; then Director of Budget Dr. Ashni Singh who pronounced that “money-laundering could have significant influence on currencies, market prices and financial stability”; then Home Affairs Minister Gajraj who in discussing money-laundering spoke of non-working millionaires and the “Siamese twins of the narcotics scourge”; his successor Ms Gail Teixeira who called on consumers to boycott drug lords’ businesses; and Commissioner General Khurshid Sattaur who had announced that GRA’s software would pinpoint money launderers.

Not only did such high level politicians and executives address their minds to money-laundering, the Cabinet in 2001 established a special task force under Dr Roger Luncheon to oversee the implementation of the Act. The report of that special task force, even if not updated, can help to accelerate the work of the Select Committee.

Issues to be addressed in the review of the AML-CFT Act of 2009:

1. Trading in foreign currency
One of the objectives of the Dealers in Foreign Currency (Licensing) Act 1989 was to regularise and regulate trading in foreign currency and to reduce the extent of the trading on the streets. The Act provided for the licensing by and supervision of bank and non-bank Cambios by the Bank of Guyana.

There were 29 licensed cambios in 1996. Nine of the cambios were run by financial institutions of which seven were commercial banks and two were Trust companies. The other 20 cambios were operated by non-bank entities. By 2000, the foreign currency market had demonstrated noticeable change. The number of registered cambios had declined from 29 to 25 to 21 by the end of 2009.

While much of the foreign exchange transactions appear to be conducted through the cambios of commercial banks – approximately 90% – and while persons would no doubt use official mechanisms to launder money, the evidence is that substantial sums are transacted via the less organized non-bank cambios and on the streets in cases of financing less desirable or unlawful activities.

Accordingly, it is recommended that the Bank of Guyana and the Guyana Bankers Association be asked to make submissions to the Select Committee on (a) whether the non-bank cambios remain relevant, and if they do (b) whether additional regulations are required to ensure that they operate within the ambit of the law; and (c) on the action required to deal with trading in foreign currency outside of the law.

2. Institutional arrangements
I once again recommend a more structured arrangement for the administration of the Act. While a good structure offers no absolute guarantee of the effective functioning of the Act, its absence offers no assurance that the Act will be useful.

I therefore propose any of the following options:

a) Bringing the FIU under the Bank of Guyana;

b) Establishing an AML-CFT Authority made up of several ex-officio individuals such as the Governor of the Bank of Guyana; the Commissioner General of the GRA; the DPP; the Commissioner of Police;

c) Setting up of a Financial Services Commission to oversee the regulation of the entire financial sector excluding the commercial banks; the prevention of money laundering; the Guyana Securities Council; the insurance sector; etc.

My preferred option is b), a model adopted in other regional countries.

3. Removing statutory barriers to exchange of information
Ensuring that there are no statutory barriers to providing information required to prevent money laundering, whether between and among entities inside or outside of Guyana. In particular, I recommend amending the secrecy provisions in the Income Tax Act and the Financial Institutions Act for the specific purposes of the AML-CFT.

4. Making political parties reporting entities for purposes of the AML-CFT
Political parties are practically exempt from most, and are subject to few laws, a fact evidently not consistent with the rule of law or the democratic polity of Guyana. Political parties obviously raise substantial sums of money that are not properly accounted for. They should therefore be included in the Schedule of entities subject to the Act.

5. Review
The Guyana Association of Bankers had submitted comments on the 2000 Prevention of Money Laundering Act and likely the 2009 Act. The banks have probably been the sector that made the most efforts in complying with the 2009 Act. Their contribution and recommendations on the proposed amendments are vital to ensuring that the amendments can achieve the objectives of the Act.

I also believe that the Bank of Guyana, the Guyana Bar Association, the Institute of Chartered Accountants of Guyana and the Guyana Revenue Authority and the Private Sector Commission be requested to make submissions.

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