Last Friday, the National Assembly approved of the Anti-Money Laundering and Countering the Financing of Terrorism (Amendment) Bill 2015 which had been the subject of bitter disagreement since 2012 between the previous Administration and the then political Opposition. For three years, legislators struggled without success to have the amendments passed to bring our legislation in line with international standards. Despite threats of sanctions from the Caribbean Financial Action Task Force (CFATF) and its parent body, no agreement had been reached as to the extent of the amendments.
Background to the Bill
Guyana became a member of the CFATF in 2002. In its first evaluation report issued in October 2006, the CFATF highlighted the absence of legislation on money laundering. In response, the Government tabled draft legislation in the National Assembly in January 2007 which was referred to a Parliamentary Select Committee. However, it took more than two years for the legislation to be approved. The third evaluation report on Guyana dated 25 July 2011 was very critical of the AML/CFT Act, and the main conclusion was that Guyana’s legislation needed to be overhauled to bring it in conformity with the standard recommendations used to evaluate countries’ efforts to combat money laundering and terrorist financing.
Media reports indicated that Guyana was told that the steps it had taken were minimal and that it remained in “expedited follow-up”, meaning that it is required to report at every meeting of the CFATF on progress made. In particular, there was concern that the Financial Intelligence Unit (FIU) had only the Director, whereas it was to be staffed also by a lawyer, an accountant and such other officials trained in investigative work, to enable the Unit to carry out its mandate as envisaged by the Act. It was therefore not surprising that the FIU did not produce any periodic reports nor were there any prosecutions to date.
The FIU was established in late 2003 to monitor businesses and individuals involved in filtering the proceeds of crime into the economy, and is the backbone to the AML/CFT Act. In particular, the FIU is required to submit to the Minister of Finance an annual report of its operations, performance and financial affairs, including amounts paid into the Consolidated Fund from proceeds of the forfeiture and confiscation of assets. The financial aspect of the report is to be audited and reported on by the Auditor General, and the annual report is to be laid in the Assembly within one month of its receipt by the Minister. Needless to mention, none of this happened.
In a letter dated 10 April 2013 to the then President, the CFATF referred to several warnings and references to earlier notifications of the precarious position to which Guyana was exposed since November 2012 as well as assurances given by the Attorney General, the Minister of Finance and the Head of the Presidential Secretariat that the issues raised were being dealt with expeditiously. As a result, Guyana was required to submit a comprehensive report to the May 2013 CFATF Plenary by 6 May 2013.
On 7 May 2013, the Government tabled the amendments in the National Assembly to address the shortcomings in the AML/CFT Act highlighted in the third evaluation report. The Assembly referred them to a Select Committee for detailed scrutiny and reporting to the Assembly. This approach was consistent with the action taken when the AML/CTF Act was passed in 2009, given the complex nature of the legislation and the issues at hand. The Government was, however, unhappy with the Assembly’s decision. Its position was that if the amendments were not approved by the 27 May deadline, Guyana would be blacklisted, making it extremely difficult to move funds in an out of Guyana for legitimate business purposes.
The Government argued for amendments only to the extent of the deficiencies identified by the CFATF, a kind of minimalistic position to avoid sanctions. However, the then combined Opposition wanted to use the opportunity to comprehensively overhaul the legislation in view of the extent of drug trafficking which facilitates money laundering and crime and which in turn leads to corruption. On two occasions the matter was referred to a Select Committee of the National Assembly but the outcome was fruitless, as both sides stood their ground.
Fuelled by the thought that doomsday had arrived, the business community, through their elected representatives, went full gear into a panic-stricken mode in support of the Government’s position that caused quite a hysteria among the populace. In the end, Parliament was prorogued, followed by its dissolution and the holding of fresh elections. As doomsday did not arrive, the hysteria subsided and the issue was placed on the backburner as citizens began to prepare themselves for the choice of a new government to represent their interest.
It is against this background that the passing of the amendments to the AML/CFT Act must be seen as an achievement. It is unfortunate that the political Opposition chose to boycott the event and therefore the Bill gained unanimous support from those legislators who were present. It was a missed opportunity to engage in a healthy, disciplined and constructive debate, the results of which might have seen further amendments to the draft Bill.
There are three main areas that the amendment Bill covers, namely: (a) the expansion and tightening of certain definitions, and the inclusion of new ones in the Interpretation Section of the Act; (b) the creation of an AML/CFT Authority which will act as a kind of Board to provide oversight of the operations of the Financial Intelligence Unit (FIU), free of political involvement and interference; and (c) new procedures for the appointment of the Director of the FIU.
Amendments to Section 2 dealing with definitions
Four more new definitions have now been added to the Act, namely, “beneficial ownership”, “originator”, “originator information”, “shell bank”. Beneficial ownership refers to ownership by a person or persons ultimately exercising individually or jointly voting rights representing at least 25 per cent of the total shares or ownership rights of an entity. “Originator” refers to anyone who makes a wire transfer while “originator information” relates to information about the person such as name, account number, address, ID number, and date and place of birth. “Shell bank” is defined as a bank that has no physical presence in the country in which it is incorporated and licensed and which is not affiliated to any regulated financial group that is subject to effect consolidated supervision.
The other amendments to Section 2 relate to the strengthening or tightening of a number of definitions. These include:
(a) Replacing “negotiable instruments” with “promissory notes or any other negotiable instruments including bearer negotiable instruments whether or not endorsed without restriction, or made out to a fictitious payee”;
(b) Expanding the definition of “proceeds of crime” to include “ indirect proceeds of crime including income, profits or other benefits from proceeds of crime and property held by any other person and assets of every kind whether tangible or intangible”;
(c) Providing for a more elaborate definition for property to include “money, investments, holdings, legal documents in any form, including electronic or digital, evidencing title to or interest in assets of every kind…”; and
(d) The broadening the definition of terrorist financing to include funds whether from a legal or illegal source.
In addition, the entire subsection 2(1) has been replaced, essentially to remove the role of the Attorney General in recommending to the Minister of Finance appropriate action in respect of any person or entity suspected of being involved in anti-money laundering activities and of violating the Act. The amendment now vests that responsibility with the Director of the Financial Intelligence Unit (FIU).
Creation of an AMF/CFT Authority
The creation of an AML/CFT Authority removes ministerial control over the functioning of the FIU and places oversight responsibility in the hands of an Authority, comprising ten members appointed by the National Assembly by simple majority on the recommendation of the Parliamentary Committee on Appointments. The key responsibility of the Authority relates to providing advice to the FIU of a general nature as to policy that need to be followed in the exercise of its functions. Specific responsibilities include:
- To ensure that the work of the FIU is conducted in an efficient, fair and cost effective manner in accordance with policy guidelines determined by the Assembly and the Minister;
- To ensure, in the national interest, the performance of the FIU accords with our international obligations and commitments;
- To monitor and review compliance with all relevant legislation, policies and measures;
- To ascertain the need for any legislation or amendments to existing legislation;
- To cause to be investigated any complaint, irregularity or mismanagement by the FIU, and to propose remedial action; and
- To assist in the dissemination of information on the work of the FIU, and to enlighten the public of the need for cooperation with the FIU.
Appointment of the Director and Deputy Director of the FIU
Under Section 8 of the AML/CFT Act, the Minister of Finance is responsible for appointing the Director of the FIU. This section has now been amended to provide the National Assembly by simple majority with the authority to appoint the Director and the Deputy Director, based on a recommendation of the Parliamentary Committee on Appointments. This is a progressive step that minimises the extent to which political influence can be brought to bear in relation to these appointments.
