By Christopher Ram
Introduction
After two years before a Special Select Committee, new anti-money laundering legislation was passed by the National Assembly on April 30, 2009 and assented to by the President on August 14, 2009, a gap of close to one hundred days. Given the track record of the President in assenting to legislation presented to him, these dates are relevant. Under Article 170 the President must notify the Parliament within 21 days of the date of presentation to him of the bill any reason for withholding his assent. Logically then if the President is not refusing, he should assent within 21 days. No reason has ever been given for the delay.
Not only is this new legislation more than about the prevention of money laundering – it is also about countering the financing of terrorism. And that is why I think that barring some mini-miracle, this act will be as little-used as the predecessor act (the Money Laundering (Prevention) Act 2000) which is now repealed. In a submission I made to the Select Committee I wrote that the bill is an immensely complex piece of legislation covering some one hundred and fifteen sections – it is now one hundred and sixteen – and will require several pieces of supplementary legislation to support it. I did not use the words “to make it work” because given the country’s capacity, I did not consider that the bill if passed in its present form would be enforceable. Our parliamentarians are a stubborn lot who have learnt little from their past
experience.
Sun-Tai-Lees
While Guyanese have been told, not without some justification, that the previous anti-money laundering legislation had deficiencies and was short of some important provisions, the new act simply has too many. And what was it short of? Seizure yes, but just look at the Narcotics Act and see who is caught. In my view, it is not that the former act was bad but that there was no real effort at making it work. I do not recall a single piece of subsidiary legislation passed under the act and the hand-picked Director of the Financial Intelligence Unit (FIU) was reported in the Stabroek News of Monday, January 8, 2007 as saying that he did not wish to speak to the media on the work that the FIU was doing.
The new act is largely imported legislation in which almost fifty sections are concerned with the international fight against terrorism but which completely ignores our domestic circumstances. The New York courts have exposed the huge amounts of narco-money that have been flowing into and out of Guyana by well-known Guyanese, and yet the FIU and other agencies concerned with illegally obtained gains have failed to prosecute even one of the perpetrators over the course of more than five years. Some of the streets and areas in Guyana are as well-known for washing dirty money as Sun-Tai-Lee was renowned for cleaning dirty linen. And some non-bank cambios operate with their own laws and rules of accountability facilitating all forms of laundering including widespread tax evasion. Why did we not use the law as it existed, given that we have had a unit specifically set up to deal with that? And why did the Select Committee not try to find answers to these questions? In fact it seems that the committee was almost entirely dependent on that person who appears to have actively participated in the proceedings of the committee.
Shared responsibilities and cosmetics
The Select Committee met on fifteen occasions under the chairmanship of the Minister of Finance who shares ministerial responsibility for this act with the Minister of Legal Affairs. At the end of the process, however, the bill remained largely intact with many of the changes being no more than cosmetic. Inserting one word here and another word there is hardly what one would expect from a group of a dozen Members of Parliament working for over two years. With no disrespect meant, many of the changes made to the original draft, were the type that a careful editor or draftsperson makes. It did not need twelve wise persons sitting around for hundreds of hours. A similar, notable precedent was the poorly drafted Value-Added Tax Bill in which the only changes accepted by another Select Committee from the substantial submission by the Private Sector Commission were refinements to inadequate drafting. I would mention too the Companies Act 1991, which has shared responsibility but which has remained almost unchanged despite some glaring deficiencies. One fears a repetition of such inaction.
It seems that in common with everything else, the committee was hampered by political loyalty trumping professional judgment. During my presentation to the Select Committee I could not help but notice the contrast between the openness of the members from the parliamentary opposition and the rigid positions taken by those from the government side. I remember in particular being castigated by one member from the government side for making a comment that he often makes, not only privately but publicly as well, so great is the political spell under which some persons seem to fall. The membership of the Select Committee reflects the proportion of seats in the National Assembly so the views of the members of the PPP/C almost invariably prevail.
Bureaucracy, reporting entities and activities
Section 9 of the legislation gives to the FIU powers and duties, some of which are mandatory and others within its discretion, but even if only some of these were to be carried out with minimum efficiency, it would require a significant bureaucracy and budget which the government may be unwilling or unable to finance. Will we again go begging external donors? Just look at how the government has had the Stock Exchange, the Securities Council and the Office of the Commissioner of Insurance struggling for funds. Why would the government be more serious on money-laundering when political parties in the past were known beneficiaries of laundered and illicit money? In fact when the history of money-laundering in Guyana is written it will be found that political parties and key trade unions were the earliest players in the money laundering game, and there is no reason to suggest that some of that no longer exists.
Under the act the reporting entities are classified under two broad headings – Financial Institutions and Designated Non-financial Business or Profession. Financial businesses are mainly those engaged in banking and financial business while the second category includes casinos, betting shops and lotteries when their customers engage in financial transactions in excess of $500,000. It includes dealers in precious metals, accountants and attorneys acting in relation to specific activities, trustees etc.
The activities subject to the act are wide-ranging and include finance leasing, credit unions and advisory services including undertakings on capital structure which is part of the daily fare of attorneys-at-law and accountants. Included as well are cambios, pawn-broking, used cars dealers, exporters and importers of valuable items and dealers in real estate.
Section 18 of the act places an obligation on reporting entities to pay special attention to suspicious transactions and to report promptly such transactions to the FIU. Which cambio dealer would feel safe that he can report an approach from one of our drug lords or which pawnbroker would have the resources to set up the mechanism for detecting suspicious transactions?
It seems that the only people who have taken the prevention of money-laundering seriously are the financial institutions. Only today I asked a prominent real estate agent how he was coping with the act. His response was a blank stare. I have no doubt that the same would be true of many pawnbrokers, accountants and lawyers. And why should we believe that accountants who help their clients to duck income from the taxman would report his clients to the Financial Intelligence Unit? And is it likely to be any different with the lawyer who manufactures documents for the benefit of his client? It is time for us to get real.
Conclusion
One of my biggest concerns about the act is that its architects consider that the FIU is a role which can be carried out by a single person operating with an accountant, (it is not stated whether this is required to have a professional qualification) and an attorney at law along with one support staff member. I am aware that the Barbados model was commended to the committee but obviously ignoring any fears about corruption it has decided not to follow the Barbados model which has at the supervisory level a Anti-Money Laundering Authority comprising the Commissioner of Police, the heads of Income Tax and Customs, the Supervisor of Insurance, the Registrar of Corporate Affairs and representatives of the Governor of the Central Bank and the Solicitor General. This is clearly not a function which should be placed under a single person accountable to a minister. It may be particularly helpful to examine the Barbados model.
One serious weakness in the act is that it does not appear to require the investigation of the source of funds of “foreign investors” some of whom are engaged in the international laundering of money.
The act has been passed but it is practically useless without the necessary regulations for the various sectors and activities it covers. Until these are done, except for the financial institutions, there is really a gap – albeit temporary – in anti-money laundering activities. It is remarkable but during the past year there has been growing evidence of massive money laundering. Until we get serious the launderers are having a field day.
