Introduction
In the previous two columns the prevailing architecture of global anti money-laundering regulation under the Financial Action Task Force (FATF) was introduced by way of the seven major groupings of the targeted areas within which this structure is organized. The principal items, which are focused on in each of these groupings have also been addressed. In the course of that presentation, much emphasis has been placed on the fact that the FATF had emerged from a radical turnaround in the attitudes of the leading industrial nations to the negative impacts Offshore Financial Centres (OFCs) were having on their national economies.
These adverse impacts were clearly due to 1) the explosive growth in tax evasion (which was systematically undermining the fiscal capacities of their states); 2) the corrupting/undermining influences (social, economic and political) of those organized criminal networks that were associated with globally organized tax evasion; and later 3) the devastating impact of terrorism and the proliferation of weapons of mass destruction.
The Caribbean Financial Task Force (CFATF), however, emerged out of the national indignation and outrage the OFCs felt on the announcement of the formation of the FATF. That organisation was portrayed at the time as an outright betrayal of poor countries by rich ones. Politically, and ideologically, these initial responses by the OFCs were therefore, explicitly anti-colonial and anti-imperialistic, and the governments of OFCs set about to mobilize their populations to resist this bullyism and aggression by the rich nations.
However, the dynamics of the circumstances at the time were such that these protestations were quickly overwhelmed by the sheer asymmetry in economic and geopolitical clout between the relatively few rich countries and the larger number of smaller and poorer OFCs. It is important to note that the rich countries were quick to employ a battery of strong-arm economic tactics to bring the OFCs to heel.
These strong-arm tactics included black-listing countries that did not cooperate and/or naming and shaming those in a public list of deemed OFC offenders. They also resorted to a number of fiscal and financial regulations designed to negate the attractiveness of OFCs. These included 1) not allowing deductions to non-compliant jurisdictions; 2) withholding taxes on payments to residents in non-compliant jurisdictions; 3) stiffening the reporting requirements of non-compliant jurisdictions and also terminating tax treaties with these. Broader economic restrictions were also applied in some instances, such as the refusal to grant aid; technical assistance; maintaining special surveillance; as well as placing additional charges on transactions involving non-compliant jurisdictions.
CFATF
Caricom countries were perhaps the most vocal opponents of the FATF actions. This did not last long, as under the pressures from the leading industrial powers they felt compelled to fold. As matters have turned out the Caribbean area, led by Caricom was the first to establish a FATF-style Regional Body (FSRB) ‒ the CFATF. Ironically, today this body that originated in protest now epitomizes regional self-driven efforts aimed at becoming the ‘best’ executing regional agency (FSRB) dedicated to the fulfilment of FATF’s mission.
CFATF comprises 29 Caribbean member states and is headquartered in Port-of-Spain, Trinidad and Tobago (Notably, Cuba is not a member, but there are initiatives currently underway to secure this). CFATF has several observer organisations attached to it including the Common-wealth Secretariat; European Commission; IMF; World Bank; IDB; and several United Nations special agencies dealing with organized crime, drugs, terrorist financing, and proliferation. There are also a number of cooperating and supporting nations. As the first FSRB, the CFATF is presently celebrating its 20th anniversary.
Guyana situation
Guyana became a member of the CFATF in 2002. It had its first Mutual Evaluation Report (MER) conducted in 2006 as part of the CFATF’s second round of those evaluations. MERs are based on the laws, regulations and the other materials supplied by the country under review (in this case Guyana) as well as the information derived by the CFATF Team during its on-site visit (Guyana). Among other things, on-site reports seek to review 1) the institutional framework and 2) the relevant anti-money laundering and countering terrorist financing (AML&CFT) laws, regulations, guidelines and other requirements, as well as the capacity, implementation, and effectiveness of the regulatory and other systems in place.
Guyana’s last on-site visit by the CFATF Team arising from its MER was in 2011 and the resulting report was adopted by the CFATF’s Council of Ministers the same year (2011). As a result of that report, Guyana was placed on expedited follow-up and required to report at every CFATF plenary. A Third Follow-Up Report was presented towards the end of 2012. Later a Fourth Post-Plenary Final Follow-Up Report was presented in 2013.
The Fourth Report summarized Guyana’s progress as follows: 1) Anti Money Laundering and Countering the Financing of Terrorism (Regulations) was enacted. (This was designed to supplement the existing law by focusing on identification, record-keeping, reporting and training procedures). 2) the Anti-Money Laundering and Countering the Financing of Terrorism (Amendment) Bill of 2013 was laid in the National Assembly on April 22, 2013 (this was one week before its deadline for implementation ‒ April 30, 2013). The Bill is designed to meet MER recommendations.
Additionally, the Financial Intelligence Unit (FIU) started training programmes for relevant agencies in order to heighten their awareness and understanding of their responsibilities and legal obligations. The resources of the FIU (human/ physical/ financial) were also augmented in order to build its capacity.
As a result of the enhancement of the FIU, two of Guyana’s outstanding Recommendations (10 and 19) were deemed as met in its Fourth Report. The outstanding Core and Key Recommendations for Guyana are indicated in the Schedule below. With reference to its Other Recommendations that is, non-core and non-key, Guyana was rated partially compliant in 10 and non-compliant in 17.
Schedule: Guyana’s outstanding Core and Key Recommendations (2013)
Recommendations 1, 5, 13, SR. II, SR. IV, 3, 4, 23, 26, 35, 36, 40, SR. I, SR. III, SR. V
Note SR= Special Recommendation
Source: CFATF, 2013
