The Private Sector Commission (PSC) has issued a new appeal to the government and opposition to resolve the impasse over the anti-money laundering bill, while saying signs of a decline of investment by private enterprises are directly linked to uncertainties created by possible sanctions.
“The Private Sector Commission is pleading once again to the elected officials of the country to work with each other to arrive at a solution for Guyana to meet the legislative requirements of an effective Anti-Money Laundering and the Countering of Financing of Terrorism [AML/CFT] Regime before the June 2014 Plenary Meeting of FATF in Paris,” the group said in a statement, following the recent call by the Caribbean Financial Action Task Force (CFATF) for stepped up countermeasures against Guyana by countries in the region. CFATF has also referred Guyana to the international Financial Action Task Force (FATF), which is scheduled to hold its next Plenary in Paris, France later this month.
CFATF’s call comes in the light of the failure of the country to meet repeated deadlines for the passage of the bill, which is expected to make the country compliant with international anti-money laundering and countering the financing of terrorism standards. The bill remains in the custody of a parliamentary select committee, while government and the opposition APNU and the AFC are deadlocked over conditions for its passage. While the government has demanded the unconditional passage of the bill, APNU and the AFC are seeking the enactment of bills passed by the National Assembly but vetoed by the President as well as the establishment of the Public Procurement Commission.
The PSC said it was disheartened by CFATF’s latest pronouncements on Guyana and argued that the situation could have been wholly avoided if the elected officials in the National Assembly “collectively acted in the interest of the country rather than in their self-serving political agendas.”
The countermeasures, CFATF has said, can include “the requirement of enhanced due diligence measures; introducing enhanced reporting mechanisms or systematic reporting of financial transactions; refusing the establishment of subsidiaries or branches or representative offices in the country concerned; or otherwise taking into account the fact that the relevant financial institution is from a country that does not have adequate AML/CFT systems and limiting the business relationships or financial transactions with the identified country or persons in that country.”
According to the PSC, the countermeasures called for by CFATF will reverse the progress made by the private sector over the last 10 years. “Loans and advances to the private sector by the commercial banks is one of the reliable indicators of private sector growth and investments. This was $40.8B in 2004 and rose to $128.2B at the end of Dec 2013. At the end of the first quarter of 2014, the balance dropped to $127.5B and has been stagnant for the last 3 months. This is a sign that there has been a decline in the investments made by the private sector,” it said. “This is linked to a lack of confidence and a high level of skepticism by private enterprises in the economy due to the uncertainties brought about by the possibility of sanctions,” it added.
With Guyana already ranked poorly on many international indices, such as the World Bank Doing Business Report and the World Economic Forum Global Competitiveness Report, the PSC lamented that the referral to FATF only worsens this situation.
Further, it said countermeasures called for by CFATF once fully implemented by countries that are trading partners with Guyana can significantly weaken our economy and reverse the gains made in poverty reduction.
The PSC emphasised that due to CFATF’s classification of Guyana and its referral of the country to FATF, both legitimate and illegitimate businesses are being lumped into the same “high risk” category. Moreover, it argued that legitimate law abiding businesses are going to feel the consequences even more because money launderers and financiers of terrorism “will continue to find sophisticated methods of by-passing the system as they are good at scheming and plotting and they would not mind the extra cost associated with doing so.” Legitimate businesses, it added, have no alternative but to comply with the onerous systems and bear the extra cost. “For this, the consumer will eventually suffer as business models are built to pass on and recover costs fully,” it said.
“which could entail, among others, the requirement of enhanced due diligence measures; introducing enhanced reporting mechanisms or systematic reporting of financial transactions; refusing the establishment of subsidiaries or branches or representative offices in the country concerned, or otherwise taking into account the fact that the relevant financial institution is from a country that does not have adequate AML/CFT systems and limiting the business relationships or financial transactions with the identified country or persons in that country.”