Proposed APNU amendments to anti-laundering bill raise concerns, Caribbean adviser says

- implementation of legislation crucial

Caribbean Financial Action Task Force (CFATF) adviser Roger Hernandez has expressed concern about amendments to anti-laundering legislation proposed by APNU and has also said that once passed, Guyana will have to implement those laws before it could be removed from a regional blacklist.

“Once the legislation has been put in place there will be assessment of implementation, Guyana will have to report on the assessment of implementation before it can come off the list. So it’s not just a matter of passing the legislation. Guyana will also have to demonstrate implementation…,” Hernandez, told reporters on Friday. This can take anywhere from 18 months to two years or even longer, he said.

Hernandez was here to brief the parliamentary committee examining the stalled Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) (Amendment) Bill, and he expressed concern over amendments by the main opposition APNU.

As proposed now, the bill itself without any additional amendments is compliant with the recommendations that were made concerning Guyana meeting the AML/CFT standards, he said. APNU has proposed several amendments.

Attorney-General Anil Nandlall asked Hernandez to relate what he had told the committee in relation to the amendments and while the CFATF official said that the agency cannot get directly involved in the legislative process of member countries, he was able to make known observations with regard to certain concerns arising out of some of the proposed amendments.

Hernandez said there are “two perils” going forward with the proposed amendments. “Some of the amendments that have been put forward deal with previous areas of the Act that were deemed compliant. The concern that we have is that the amendments being put forward may make those areas that were formerly compliant, non-compliant. There is a risk with that,” he said.

Additionally, there were some amendments that are outside the remit of the recommendations made by CFATF that deal with measures not mentioned in the recommendations, the official added. CFATF has no opinion on those things because they only deal specifically with the recommendations. It is up to the legislature to decide about those particular measures, he said. “Our only concern, we made a comment about some of those recommendations with regard to the effectiveness, whether they would be able to be implemented and how it might affect the whole system,” he added.

“The problem that we would have going forward with some of these things is that our process only focuses on those areas that were non-compliant. We do not focus on areas that were formerly compliant,” he said.

“We raised this concern because Guyana will be subject to a mutual evaluation for the fourth round and we are very concerned. We would like the country to be fully compliant across the board in all those recommendations so we would not like to have a recommendation that was previously compliant then resulting in it becoming non-compliant in the future. That’s our main concern going forward,” he explained.

He had noted that some of the amendments were subject to the review of the CFATF and a response was sent to the appropriate authorities with regard to their compliance with international standards.

In relation to the process leading up to the next review, Hernandez said Guyana has to submit a report to the CFATF on its follow-up process by February 28. In order for the bill to be considered by the CFATF plenary the bill has to be passed and enforced by the 28 February and submitted with the report to the CFATF, he said.

The CFATF then has to analyse the bill for compliance and a report made to the plenary in May as to what sort of level of compliance the bill has with international standards. “On the basis of that report the plenary will then be able to make a decision going forward…, whether Guyana should be subject to further counter-measures or whether Guyana should be sent or should be recommended to the FATF for what is known as the ICRG (International Co-operation Review Group) review and that is the reason for the February 28 deadline,” the official explained.

He pointed out that Guyana is not the only country required to submit information on the follow up process on February 28 and this is a recommendation for all CFATF member countries that are within the follow-up process.

“If you don’t pass legislation, in May the CFATF will decide to effectively nominate Guyana for the FATF ICRG review,” he noted. The FATF (Financial Action Task Force) is due to meet in June and at that plenary meeting will make a decision as to whether Guyana should be subject to a prima facie review by the ICRG. “If Guyana does not pass the legislation in time, [the] CFATF plenary would make a recommendation to the FATF that Guyana be placed within that review process,” Hernandez said.

The official said that at the ICRG level, Guyana can face three levels of listing.  The most severe requires countries to issue countermeasures against countries on that list and currently only Iran and North Korea are on this list.  Layer two are countries that have significant AML safety deficiencies but have not given that political commitment to deal with those issues or have not formulated an action plan in collaboration with the FATF to deal with those outstanding issues, he said.

Hernandez noted that the lowest level is countries that have issued a political commitment to implement the reforms and have also formulated an action plan in collaboration with the FATF which sets out deadlines for the implementation of those reforms.

After the ICRG review Guyana can find itself on any of the three levels. “Most likely if it does not have, if it does not issue a political commitment and if it does not agree an action plan, it could be listed on the second level. If however, it does during the period of review because during the review the FATF will contact the authorities in Guyana to ascertain or to get additional information and to try to ascertain what are the areas of deficiencies, if after that review, Guyana during that process does offer a lot of commitment and comes to an agreement with the FATF about an action plan, Guyana will be listed at the lowest level,” he said.

The official stated that once it lists a country, the FATF is telling the world that this country have serious AML deficiencies and countries should take appropriate measures to deal with the risks emanating from it because of these particular AML safety deficiencies.

This could mean that individual countries could require their financial institutions to implement appropriate measures ranging from severe or stricter requirements for the opening of accounts with their financial institutions, for transactions of accounts, or for corresponding banking relationships, he said. It could also result in access to international financial markets being made more difficult because of these additional requirements and also international developmental agencies will also take note and could affect access to developmental funding and technical assistance, Hernandez added.

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