The Anti-Money Laundering and Countering the Financing of Terrorism Act 2009

Bill No. 12 of 2013 Amendments to Act 13 of 2009

By Ramon Gaskin

Since April of this year, the Government sent to the National Assembly a Bill with approximately 20 Amendments to the Anti -Money Laundering and Countering the Financing of Terrorism Act 2009 (AML & CTF) but notwithstanding various deadlines reportedly set by the foreign entities pushing the law and amendments, they have been stuck in the Committee system.

We are told there may be serious consequences for Guyana and its banking system if these Amendments are not approved, but this didn’t have any impact on the Parliamentarians who happily proceeded on holiday, leaving it for another day.

Ramon Gaskin
Ramon Gaskin

The Principal Act deals essentially with matters relating to the creation of an entity  called Financial Intelligence Unit (FIU), unlawful proceeds of serious offences, prosecution for money laundering and terrorism financing, civil forfeiture of assets and related issues.

The tabling of the amendments provides the opportunity not only to examine the amendments themselves but also the Act of 2009.

The mention of the FIU reminds us that this so called Intelligence Unit has been a toothless poodle and a complete failure since it was established in 2009 and comfortably ensconced in the Ministry of Finance. Its Director had no intelligence training and was therefore thoroughly unsuited for the job, besides being politically appointed by political friends who quite casually by-passed the appointments process of the Public Service Commission.

It also has not occurred to the Minister of Finance that he himself failed to comply with the reporting requirements of Section 110 of the Act since 2009 and it is not clear whether this failure has to do with the failure of the Director to submit his Report or it’s just that there is nothing to report to the National Assembly.

What is clear is that there have not been any prosecutions brought under the Act by the DPP whose job it is to institute or “consent” to such a prosecution in writing under Section 113.

The failure to bring a single prosecution in four years is utterly incomprehensible and could only mean that the Unit is incalculably incompetent or deliberately unwilling to bring a potential prosecution to the DPP’s Chambers.

This glaring fact is sufficient to review this so-called Unit and to make dramatic changes, if the government is truly serious about money laundering.

In this regard, the first step to take is to replace the present Director with a trained, qualified and competent person, to make this a public service appointment or one done by Bank of Guyana but certainly not a political appointee and to relocate the Unit and to properly staff it to the Bank of Guyana where it should have been located in the first place.

These Amendments are not difficult to do. There also need to be some necessary Amendments to the Financial Institutions Act and the Bank of Guyana Act that deal with the banking system.

Money laundering activities feed directly into a parallel, underground, illegal banking system and it is logical that the Bank of Guyana should be placed in charge of these matters.

An additional simple reason for this is that the Financial Institutions are already required to report to the Governor and to now have them report to a political appointee in the Minister’s office tarnishes the process and creates a bifurcated system of reporting.

With all the money laundering taking place in-front of our very eyes, the Unit has proved to be utterly useless and incompetent.

Before getting into the merits and the demerits of the published Amendments, we are immediately struck by the roles, functions and powers of the Minister of Finance and the Attorney General in the administration of the Act 13 of 2009 (AML & CTF).

One of the main problems with the Act is Section 2 wherein the Attorney General (AG) based merely, on his “reasonable grounds to believe” that an entity  has actually committed or attempted or facilitated or participated in a terrorist act or is knowingly acting on behalf of one which has, can recommend to this colleague the Minister of Finance (MoF) to make an order to declare the entity, a “specified” issue and to publish same in the Gazette if he so agrees and after consultation  with the said AG who initiated the process in the first place. Weill!!Well!!!

As far as I am aware, this is the first piece of legislation that creates a “blacklist” of entities  based exclusively on some unknown “reasonable grounds” that only the AG and Minister  of Finance are aware of.

This smacks of something the Americans call “Mc Carthyism” whereby you could be thoroughly destroyed and blacklisted by a politician without due process. A further complication is that the legislation requires the blacklisted entity to appeal to the Minister himself for revocation of the order, giving clear meaning to the well-known phrase “appealing from Caesar to Caesar”.

Where the little Caesar refuses, the blacklisted entity may apply to a Judge for judicial review (Section 2 (7)), who may, at the request of the other little Caesar, the AG “hear all or part of the evidence or information in the absence of the applicant or any counsel representing the applicant” on the grounds of “national security or endangering the safety of any person”.

But the ordeal of the blacklisting based on the so called unknown “reasonable grounds” of the politicians  who are now apparently exercising judicial review functions (including appeals} plus the indignity  of being pushed around by the AG and the Minister  doesn’t end there.

The Judge, if satisfied that the original order of the Minister deserves to be revoked, in Section 2 (d) then  makes an order, which can be appealed by the Minister, for the Minister of Finance to revoke his order.

All of this is extraordinary and absolutely amazing in the annals of law making.

As if to deliberately compound the travesty, the Act in Section 8 provides  inter-alia that the Judge may receive in evidence anything which in his opinion is “reliable and relevant” even if the “thing would not otherwise be admissible in law and may base the Court’s decision on that  evidence.”

It is hard to imagine anything more lawless than the notion that the Judge would be allowed to deal with “evidence” that would not otherwise be admissible in law and further “may base the Court’s decision on that evidence”

The lawlessness of accepting generally inadmissible “evidence” is compounded by the fact that this Judge may base his decision on lawlessness. There are many things wrong with this law, including the role and functions of the politicians- viz. the AG and the Finance Minister.

First of all, the AG and the Minister appear to be vested with a role in law enforcement. Under Section 2 (1) where he has “reasonable grounds to believe” that a crime has been committed or is attempted or knowledge about participation or facilitators then he takes action in concert with the Minister of Finance. This is all nonsense. It is also illegal.

In our system of law enforcement and justice, where any person has “reasonable grounds” concerning criminal activity, then the proper  agencies to contact are the Guyana Police Force for further investigation and garnering of evidence and the Office of the DPP “to institute and undertake proceedings” where she considers it desirable under Article  187 of the Constitution.

On the question of actual or attempted criminal activity or participation in criminal activity, the Guyana Police Force is so empowered by the Police Act Chapter 14.01to act. Surely the Attorney General knows this or ought to know this.

Every citizen has a duty “to combat and prevent crime and other violations of the law” (Article 32 of the Constitution) and only as a citizen can the AG and Minister, like other citizens involve themselves in assisting in law enforcement. Incidentally the Constitution in Article 112 declares that the Attorney General “shall be the principal legal adviser to the Government.” That is his role.

Obviously, in addition to being the “principal legal advisor,” the AG has other duties other than advisory, since he also oversees the work of the Ministry of Legal Affairs but the Constitution is pellucid on the question of the responsibility “to institute and undertake criminal proceedings.”

Therefore, to the extent that Section 2 purports to vest a role for the AG and the Minister in criminal matters, it is inconsistent with the Constitution and is VOID (Article 8).

Further, the compiling of a “blacklist” of entities and publication in the Gazette is utterly illegal. There is no authority in the Constitution for blacklisting anyone without due process.

The idea that the Minister of Finance also gets in on this lawlessness is completely preposterous. What is more outrageous is the so called appellate process to exit the blacklist. First, an appeal to the Minister for review, then if unsuccessful to a Judge, who is unlawfully empowered in Section 2 (7) to exclude the appellant and his counsel from  the proceedings and even if successful, the Judge, having conducted a judicial review of the facts, then sends the applicant/appellant back to the Minister for him to do the revocation of his originally flawed order  rather  than doing the revocation himself. And, here again, in so doing gives the political Minister the “right” to further keep you in the blacklist by granting him (the politician Minister) additional right to appeal the decision of the Judge and further delay any prospect of exiting the blacklist.

The reader must appreciate that in this review, we are still at Section 2 of the AML & CFT Act 2009 which has 116 sections.

The Guyana Constitution in Article 144 (1) states clearly the rights of persons charged with a criminal offence namely “the case shall be afforded a fair hearing within a reasonable time by an independent and impartial Court established by law.” This is as clear as can be.

Nothing here about blacklists or involvement of political Ministers.

Article 144 (2) (a) confirms the presumption of innocence until “he is proved or has pleaded guilty.” The AML & CFT in letter and spirit gives short shrift to this guarantee.

As far as the trial is concerned, it states clearly in 144 (2) (f) “except with his consent, the trial shall not take place in his absence unless he so conducts himself as to render the continuance of the proceedings in his presence impracticable.”

In such a situation, the Court may order the accused to be removed. This is not the same as the AG requesting the removal of the applicant from the review hearing. Of course, the application before the Judge for review of the blacklisting is not a criminal trial as such but there is no evidence to suggest that the Constitutional protection of the citizen is in any way diminished merely because it is a hearing for judicial review. Clearly therefore, 2(7) b is VOID as is 2 (1), 2 (2), 2 (3), 2 (4}, 2 (5), 2 (6), 2 (7) and 2 (8).

Under 2 {9) the AG reviews Ministerial Blacklist Orders and purports to exercise the said function of the Judge in 2(7)       (d) by recommending to his Cabinet colleague the Finance Minister to revoke orders originally made by the Minister on the recommendation of the AG.

This also is VOID.

The Constitution gives neither the AG nor the Minister any such authority.

Section 2 of the Act is replete with violations of the Guyana Constitution and needs to be removed from the law books. It is apparently drafted and crafted by persons unfamiliar with the Guyana Constitution, probably using some template from foreign sources. Unfortunately, the legislation was passed unanimously including by all the lawyers on the Parliamentary benches who claim to be trained in law and who are sworn to uphold the Constitution.

 

Obviously they were all asleep at the wheel. In their haste to improperly vest the politicians with roles in criminal law enforcement, they omitted to enjoin the politicians to turn over their “reasonable grounds to the Police and the DPP for investigation and possible prosecution.

In summary, Section 3 (1) seeks to define the offence of money laundering as the conversion or transfer, concealment or disguising of the true nature, origin, location, disposition movement, ownership, acquisition, possession or use of property where there are reasonable grounds to believe that the property is the proceeds of crime. Also, to conspire to commit or to attempt to commit any of the above. In order to accomplish global reach, the Act in Section 7 provides for extra territoriality so that persons committing the offences named by the Act overseas may be tried in Guyana without prejudice to extradition when applicable.

Such a trial would pose new challenges such as the garnering of evidence for the prosecution of offences committed overseas and the availability of witnesses etc. for such a trial.

The definition itself does not fully encompass the elements in money laundering and fails to emphasize the transactional nature of the activity whereby the person presumably needing to launder proceeds, including proceeds of crime, does so through a system of private borrowing and lending activities with another person who actually receives the proceeds and does the laundering through real estate construction (very often) and other investments.

The offence therefore in the majority of cases involves two or more persons to execute although in some cases, the person doing the laundering is also the same person who owns the proceeds being laundered.

There does not seem to be an acknowledgement that proceeds of crime are often mixed with legitimate business proceeds, which are also widely laundered.

In order to properly capture the participants in money laundering, it is necessary to understand the various mechanics in place by which money laundering takes place, the least of which is the formal banking system.

In an economy with substantial informal economic activity, it is to be expected that most money laundering activities form part of the informal economy, particularly since the persons who very often wish to have these proceeds laundered do so not only to conceal the criminal origin of the proceeds, but also to evade the taxation of these funds which disclosure would provoke.

It is also important to note that not all laundered monies are proceeds of crime originally but are funds generated  in a “normal” way from legitimate business but because mainly of the need to evade tax on it or to conceal its very existence, then it gets laundered and tax is evaded as a necessary consequence.

Equally well known is the fact that the formal banking system with all its traceable paper trails is not always the preferred mechanism of launderers and launderees.

It is also well known that many of these elements operate openly in the formal economy so that the commingling “mixing” of funds becomes problematic and requires trained investigators to sort out.

It is probably for this very reason, that the Financial Intelligence Unit was established by Section 9 with a vast range of functions and powers.

As already explained, this FIU has failed abysmally since its creation and has been unable to even secure one conviction since 2009. It is clearly too close to the political rulers and lacks the capacity, capability, skill, independence integrity and resources to do its job.

That is why it needs to be comprehensively revamped, professionally resourced and led and placed preferably in the Bank of Guyana. The Act has to be amended accordingly to give effect to this.

The Attorney General once again features in Section 33 (1) on the same level and in the same breadth as the DPP on the question of obtaining evidence of the commission of certain offences including money laundering, terrorist financing etc. by seeking an interception of communications order.

This authority purportedly given to the AG to be involved in garnering evidence for criminal prosecution needs to be revoked forthwith, by way of repeal. As indeed, it should be in every other part of the Act, where the drafters confused the role and authority of the AG (Section 112 of the Constitution) and the DPP (Section 187 of the Constitution). It may well be that the drafters are familiar with jurisdictions where the AG has a lot of authority in the criminal justice system as the UK, USA. But not here.

Fortunately, the Constitution of Guyana places a Chinese Great Wall between the two. A somewhat similar problem exists with the police powers vested in the so-called Director of the FIU appointed by the political Minister. The so-called Director has “power” to, among other  powers, apply to a Magistrate for a search warrant (Section 29 (1) to a Judge or for a monitoring order (Section 31(1)), for a detention order for currency seized (Section 37 (1) (3), for an order for documents (Section 24 (1)) etc.

This is entirely wrong, violates the Constitution and politicizes the investigation and enforcement of crime.

For example Article 143-  search of a person or his property or the entry by others on his premises, Article 142 – re Protection of Property. Similarly, under Section 39 (5b), the Act provides for the charging of persons for “offences against the laws of a foreign state.”

The Constitution in Article 144 is silent on the question whether the Guyana Courts can prosecute for an offence committed against the laws of a foreign state and how from a practical point of view, the accused may be afforded the guarantees of the Constitution.

Suffice it to say that in Article 144 (14) criminal offence means a criminal offence “under the Laws of Guyana”. It is noteworthy that pursuant to Section 66 of the Act, the provisions of sections 38 to 64 (inclusive shall only apply to property coming into the possession or under the control of a person after the coming into force of this Act.”

These sections deal exclusively with the freezing and forfeiture of assets in relation to money laundering

Part IV of the Act.

Contrast this with the definition of proceeds of crime under Part VII of the Act which means any property obtained or received at any time (whether before or after the passing of this Act) by or as a result of or in connection with the commission of a serious offence etc. This appears to be inconsistent with Section 66.

In any event, we are reminded that in Article 144 (4) of the Constitution “no person shall be held to be guilty of a criminal offence on account of any act or omission that did not, at the time it took place, constitute such an offence, and no penalty shall be imposed for any criminal offence that is more severe in degree or nature than the most severe penalty that might have been imposed for that offence at the time when it was committed.”

All of this needs to be reconciled i.e. Sections 38-64, 66 and Article 144 (4).

The Act in Section 113 gives the obligatory acknowledgement of the authority of the DPP in the institution of prosecutions in respect of the offences committed under the Act but it adds curiously that prosecutions shall be instituted also “with the consent in writing of the DPP.” It is not clear who is  seeking here the “consent” of the DPP.

However, Article 187 of the Constitution unambiguously states that the DPP shall have the power “to institute and undertake” criminal proceedings and in 187 (3) confirms that the power of the DPP “shall be vested in him to the exclusion of any other person or authority” and further in 187 (4) that “in the exercise of the powers conferred upon him by this Article the Director shall not be subject to the direction or control of any other person or authority”

There is nothing here about granting “consent” to anyone who is contemplating the institution of criminal proceedings and besides the Police and Customs enforcement who also have similar power to prosecute, it is difficult to imagine who also could be seeking “consent” to prosecute.

Amendments before the committee

Section 2 Amendments tighten the definitions and are reasonably straightforward and innocuous. It introduces the concept of the “originator” i.e. the account holder or person who orders a wire transfer, proceeds of crime now include “indirect” proceeds and expanding the definition of property. Section 3

Amendments seek to expand the dragnet of persons involved in the criminal enterprise of laundering to impose and increases in fines.

If approved, telecommunication providers must now         provide information  requested by FIU and there is a greater degree of feedback by many institutions and citizens. The Constitution in Article 146 (1) protects the freedom of citizens “to receive ideas and information without interference, freedom to communicate ideas and information without interference” etc.

The Constitutional limitations on this freedom are set out in 146 (2).

It is debatable whether under Article 146 (2) the telecommunications providers may provide information to the FIU presumably by “interfering” with ideas and information carried by these means. The Amendments to Section 11protecting professionals who transmit information etc. in good faith is of little significance since they are all well protected anyway.

Amendments to Section 15, 16, 18, 19, 20 tighten the system of compliance and training. These are common sense house-keeping matters. No big problem here. The new proposed Section 68 A is instead essentially to allow for the freezing of funds in Guyana of so called terrorists or groups so designated by the Security Council of the UN until the UN designation is ended.

This sounds reasonable but quite unnecessary because all of this is already provided for in the Act. The First Schedule of the Principal Act setting out the definitions of Financial Institutions and Designated Non Financial Business or Professions for reporting purposes is quite exhaustive and captures in the dragnet most entities which will normally be involved in money laundering or have knowledge or facilitation of same.

However, the policing of these elements could be quite challenging. The belated recognition of the need to include tax offences in the schedule of serious offences is quite surprising since almost every money laundering offence involves ipso facto the commission of a tax offence.

Conclusion

These brief observations and comments are not intended to be a comprehensive review of the Anti­ Money Laundering and Countering the Financing of Terrorism Act, Act No. 13 of 2009 but merely as notes to those grappling with the Amendments and to the lay person.

The main objective is to point to problems with the Principal Act itself and the need to bring it in line with the Constitution. This will probably require the recruitment of constitutional legal experts.

It is also absolutely necessary to remove politicians, Ministers and their appointees from law enforcement activities and leave all of this to law enforcement agencies and the DPP.

There is urgent need to place any unit dealing with financial and banking issues squarely under the authority of the Central Bank and to strengthen the Financial Institutions Act and the Bank of Guyana Act to undertake these tasks which require highly trained forensic auditors, accountants, tax and legal experts working closely with Customs and Tax Administration to track down proceeds of crime and their eventual laundering and tax evasion activities (which is another crime) and to identify the entire criminal chain particularly the informal and private banking activities. This requires also specialized investigators and prosecutors from the Police and DPP’s office.

In the final analysis, no amount of Amendments or legislative changes will seriously impact money laundering if there is no strong political will to curb this offence since “without enforcement the law is nothing” to quote a famous jurist. In this regard, the great need here is for law enforcement officials of integrity who are professional, capable and independent. This is an indispensable prerequisite.

We must not forget also that many proceeds of crime are laundered through political parties and politicians to earn favours and contracts to give kickback for previous deals and to ensure the   continuation of racketeering. This segment of money laundering requires special attention and prosecution.

With regard to the financing of terrorism, the tracking and prosecution of this offence requires specialized expertise. As far as identifying the so-called terrorists, this could pose a problem since one man’s terrorist is another man’s freedom fighter. We have seen this problem in many countries where legitimate struggle for freedom and independence has taken place such as Ireland, Israel, Palestine, Algeria, Afghanistan, and South Africa among others.

Much care needs to be taken when branding persons or entities. If I recall correctly, the great Nelson

Mandela and his related organisations were so branded and prosecuted at one time.