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

The following is the text of recommendations made to Mr. David Granger, Leader of the Opposition, in connection with the Anti-Money Laundering and Countering the Finance of Terrorism (Amendment) Bill 2013. In addition to these recommendations, I provided him with a copy of my submission to the Select Committee on May 24, 2013 (see here)

In my view there is need not only to address the amending legislation but the principal Act as well. Indeed I do not believe that there is anything particularly troublesome about the amendments: the problems are with the principal Act.

Accordingly my recommendations are as follows:

1. Remove the entire section 2 (2) (1) of the principal Act, which provides for substantive law, from the interpretation section and place it as a substantive section.

2. Revise the provisions contained in 2 (2) (1) to take away any role of the Executive (Attorney General and Ministry of Finance) in the prosecution of Money Laundering. Under this provision, if the Attorney General has reasonable grounds for believing that an entity has knowingly committed, attempted to commit, participated in or facilitating the commission of a terrorist act or is knowingly acting on behalf or on the direction of or in association with a person in a terrorist act, he can request the Minister of Finance to make an order declaring an entity as a “specified entity”. Strangely, that term is not itself defined but is one of two entities under the definitions of “terrorist group”.

The functions and powers of the AG and the Minister of Finance under this provision should be transferred to the Anti-Money Laundering Authority and the courts respectively.

3. Section 8 of the substantive Act should be amended to provide for the establishment of an Anti-Money Laundering Authority on the lines of Barbados, and indeed our own [Guyana] Revenue Authority made up mainly of ex-officio members to whom the Director would report. This change will require a number of consequential amendments to be addressed by the legal draftsman.

4. There is a strong view in legal circles that the principal Act contains a number of provisions which may be in conflict with the Constitution. It would be extremely useful to have an attorney-at-law with knowledge and expertise in constitutional matters review the Act to identify any such provisions and to make recommendations to address them.

The above recommendations and the following elaboration on two of the points made in my presentation to the Select Committee on Wednesday, January 29, 2014 were submitted to the Select Committee via letter dated February 5, 2014:

1. The role of the Attorney General and Minister of Finance under Section 2 of the Principal Act.
In my presentation I recommended that the functions and powers vested in the two officers under section 2 (2) (1) of the Act be removed and transferred to the Anti-Money Laundering Authority proposed by me, based on the Barbados model.

The basis of recommendation is that both these officers are themselves subject to the Act and are potentially in a conflicting position. As the following example shows that the position of the Attorney General is particularly sensitive. Let us assume that the person appointed Attorney General has a Law practice among whose client is an entity which he has reasonable grounds for believing is an entity falling within the circumstances set out under the same provision, i.e. sub-section (2) (1) of Section 2 of the principal Act.

My contention is that the rules of the legal profession would prevent the Attorney General from carrying out his statutory duty since under the rules of legal professional conduct he cannot against the interest of his client, even if the relationship has been terminated, nor can he breach legal professional privilege. I can see no possibility of the duty being carried out by any other person since his action follows his “belief”, a very personal condition.

I also think that the existing law can be abused by politicians against their perceived opponents and in favour of the supporters of their party.

2. Political Parties
To promote their objectives, including competing in hugely expensive elections campaigns, political parties must raise considerable sums of money for various political objectives without any obligation to disclose their sources of income, even to their own members. Such sources could include terrorist groups, narcotics-traffickers, persons engaged in trafficking in persons, bribing of officials and in other serious crimes. While politically exposed persons fall within the groups to which reporting entities are required to pay particular attention, neither they nor their parties are included First Schedule as a reporting entity.

Given the level of cash transactions in which the Guyana society and no doubt political parties are engaged, the existing provision that imposes some restraint solely or mainly at the banking level would be both inadequate and ineffective.

The First Schedule includes “Used Car Dealers, car part dealers, dealers in real estate, registered charities and co-operatives all of which are no doubt customers of financial institutions. Yet they are also listed as reporting entities with the duty to establish and maintain records in prescribed format under Section 16 and to report suspicious transactions under Section 18.

I do not believe that the law should impose greater obligations on Used Car dealers and Real Estate agents than it does on political parties. I would restate the point made before the Committee that the absence of campaign financing legislation, or of any regulatory framework governing political parties, and the implications for the subverting of the country’s democratic process, make the inclusion of political parties as reporting entities vital.

My specific recommendation therefore, is that political parties be added to Schedule 1 and that GECOM be made the Supervisory Authority.

To the suggestion that political parties are non-entities, I would simply respond that legal form is less important than the activity; that representatives of political parties make up the country’s law making body; and that even now, they appoint agents contrary to the legal maxim that there can be no agent without a principal. Apart from removing the risks to the democratic process and of laundering and financing of terrorism by or through the political parties, the Select Committee made up entirely of representatives of political parties would be sending a clear message that they regard it as the duty of everyone, including themselves to join the effort to prevent Anti-Money Laundering and the Financing of Terrorism.

Other letters, articles, etc. on the topic could be found here:

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