Gov’t ‘crying wolf’ on anti-money laundering law -Professor Thomas

Professor Clive Thomas is accusing the government of “crying wolf” over the anti-money laundering amendments after it has failed to apply almost three quarters of the provisions in the current law.

This is according to the memorandum Thomas, an economist, has submitted to the parliamentary committee considering the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) Amendment Bill, which government is hoping to enact ahead of a review next month.

Clive Thomas
Clive Thomas

Thomas, one of several stakeholders invited by the Special Select Committee to make recommendations on ways to address money laundering, says the country’s fight against money and the financing of terrorism requires more than “legal drafting” and has emphasised the need for political will, cooperation and transparency for success in addressing the problem.

Since the bill was tabled in April, government MPs have pressed their opposition counterparts to give their support towards passing the bill expeditiously to no avail. The main opposition APNU has said it intends to take its time so as to produce an effective piece of legislation, while the AFC maintains that it will not support the bill unless the government moves to set up the Public Procurement Commission and reconsider two bills which President Donald Ramotar withheld his assent from earlier this year.

Guyana was found to be insufficiently compliant by the Caribbean Financial Action Task Force (CFATF) in May, and also missed an opportunity in August to submit documents to the body which reflect that sufficient steps had been taken to address recommendations, including the passage of the bill. An extension was granted until November and unless sufficient efforts are not taken by then, government has warned of sanctions that could disrupt cross border financial transactions and trade and investment flows.

In his memorandum, seen by Stabroek News, Thomas has suggested four guideposts to help create the “strategic roadmap for the way ahead,” and these include determining whether the speedy passing and implementation of the AML/CFT (Amendment) Bill should override a more methodical and deliberate approach to reform.

It is Thomas’ belief that government continues to “cry wolf” on the situation to pressure APNU and the AFC to compromise and act speedily in the National Assembly, “even as the government itself has been dealing with these matters since the 2000s while these parties have not!”

Further, he said, “crying wolf” will allow government, when it faces the CFATF, to place the blame for the delays and deficiencies in Guyana’s fulfillment of its recommendations squarely on the shoulders of the opposition.

But, even if Guyana is found wanting in its November assessment, Thomas argues that there is absolutely no automaticity to sanctions.

He explains that CFATF has executive discretion over the steps it can take if the legislation is not passed by November, and notes that CFATF’s call to its members is for them to consider implementing counter measures to protect their financial systems.

“This is a discretionary call. And thirdly, after the call “CFATF will consider referring Guyana to FATF’s International Cooperation Review Group” (my emphasis). Again, this is also discretionary,” he says.

Thomas also argues for examining the existing legislation, enacted in 2009, which the proposed amendments seek to address. He says the committee should take its bearings from the systemic weaknesses of the legislation, several of which have been acknowledged, while noting that discussion with legal, banking and other analysts knowledgeable of the law has estimated that around 70% of its provisions have not been applied to date.

More than this, Thomas suggests that there seems to be a lack of political will to fully implementing the aspects of the bill that have not yet been applied. Considering these realities, he concludes that the Act has been “under-enforced and under implemented whether by accident or by design.”

Addressing the weaknesses of the current legislation, Thomas says that it has not adequately diagnosed the prevailing regulatory, oversight and governance environment in Guyana. He says the responsibility to carry out the Act’s provisions has been therefore left to the Office of the President and ministers and other bodies, including the Financial Intelligence Unit (FIU).  But in the case of the FIU, which is dedicated solely to combatting money laundering, Thomas notes that the body has lacked the capacity to fulfil its mandate from its inception as evident in its lack of a track record in effective enforcement of the law, asset seizures and weak cooperation with other nations.

Even the operations of such bodies are impeded because “outside political leadership” has routinely trumped their functional autonomy and independence, he says, while adding that impediments also include understaffing and underfinancing and the penetration of the state by criminal elements.

Because of these realities, Thomas says, it has become increasingly impossible to design a system for regulating the identified regulators in the Act. Even so, he suggests that the National Assembly can be a prime oversight body for such matters, particularly since the executive does not enjoy the majority in this government arm. He also offered the Bank of Guyana as a possible oversight body, especially since it also performs its banking oversight role with integrity and independence.

Thomas also emphasises the importance of determining the dimensions of Guyana’s money laundering situation, which he calls “inherently multi-dimensional.”

So far, Thomas contends, the committee has focused on the legal aspects of the proposed legislative amendments but it is imperative that the members realise that reforming the legislation “cannot be reduced to the task of legal drafting.”

Thomas, who is co-leader of the WPA, which is a constituent of APNU, argues that the challenges to the task are political in nature, , among other things, and therefore require political will on the part of government, trust and cooperation on the part of the opposition as well as transparency and inclusion of citizens. It is important, he says, that citizens are given the opportunity to willingly give their support towards the creation of a sound framework for anti-money and countering the financing of terrorism efforts.

The pursuit of solutions to money laundering, he adds, cannot be sufficiently successful without public awareness of the gravity of the threats posed, and unless this awareness exists, members of the committee will find little public support for their efforts.

Challenges are also of a cultural and behavioural nature, since many Guyanese have come to accept and/or tolerate evidence of the crime, he argues.

Thomas, who has written extensively on the underground economy, underscores the importance as well of determining the size and scale of the money laundering threat to Guyana as one of his guideposts.

Determining the size and the scale of the phenomena in Guyana is “the most important consideration for devising a strategic way ahead,” he says. To this end, his citations include a 2003 study, which found that the average size of the underground economy in Guyana made up 40%, 76% and 46% of the country’s Gross Domestic Product (GDP) during the 1970s, 1980s and 1990s to 2000s, respectively; and a 2011 study, of which he was a co-author, which estimated that for the period 2001 to 2008 money laundering accounted for 61% of the country’s GDP.




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