Up to the start of 2011, the government unit meant to track and investigate signs of money-laundering had only two employees and it was only in the following two years that more staff was hired and its budget significantly increased, according to two reports tabled in Parliament.
The contents of the annual reports of the Financial Intelligence Unit (FIU) for the years 2011 and 2012 will likely add to opposition concerns that the government had not been serious about interdicting money-laundering and only took steps when it became clear that international sanctions were a distinct possibility.
Tabled on the same day that the anti-money laundering bill failed to win passage, the FIU report for 2011 stated that there were only two employees at the start of 2011, its Director Paul Geer and an administrative assistant. Analysts have queried in the past how the thinly staffed FIU could track down suspicious transactions for investigation. They have also argued that the unit should not have been so under-resourced considering that anti-money laundering legislation had been on the books since 2000.
While having only two employees for some time before 2011, three employees were taken on in 2011 – a financial analyst in April of 2011, a database administrator in June 2011 and a legal advisor in September 2011. So whereas the budget of the FIU was $29.1M in 2011, it zoomed to $55M in 2012 with the bulk of the additional expenditure channelled to employment costs. In 2011 the employment cost was $16.7M while in 2012 it was more than double – $34.3M. There was also further hiring in 2012. A second financial analyst was hired on March 1, 2012. So whereas prior to 2011 there was no financial analyst, by March 2012 – following the growing international scrutiny – there were two.
Furthermore, the FIU only began collecting monthly threshold reports from four pivotal sectors in December 2010. This will also likely be seen by critics of the government as more evidence of a laid back approach to gathering of the requisite information. The 2011 report said that from December 2010 it began receiving from the Guyana Revenue Authority information relating to persons who were entering or leaving Guyana with foreign currency amounting to more than US$10,000.
From the nine licensed cambio dealers at the end of 2011 it began receiving data on all purchases of foreign currencies equivalent to or above $400,000 and all sales of foreign currencies equivalent to or above $1,000,000.
In relation to eight licensed financial institutions, the FIU began receiving information on all cash deposits or cash transactions equivalent to or above $2,000,000.
As regards the five licensed and active money transfer agencies, the FIU began to receive reports on all incoming and outgoing money transfers equivalent to or above $200,000.
Without this information prior to 2010, analysts have questioned how effectively the work of the FIU would have been discharged. For the year 2011, the FIU received 40,892 threshold transaction reports from the four sectors.
It would appear from the 2011 report that it was only at the end of December 2010 that suspicious activity reports (SARs) were filed as required by the 2009 anti-money laundering act. The FIU received 844 of these reports from money transfer agencies and 14 from licensed financial institutions but none from the GRA or cambio dealers.
The 2011 report said that during that year, the FIU requested financial records/data from local financial institutions on 36 suspicious subjects/activities. This comprised thirteen requests made as a result of the analysis of the monthly threshold reports from the four sectors, six as a result of SARs from local financial institutions, six as a result of SARs from local law enforcement agencies, six as a result of SARs from anonymous local and international sources and five as a result of SARs from foreign sources. No information was provided in the report on the outcome of its analysis of the 36 matters.
The 2012 report said that the FIU received 38,625 threshold transaction reports and 807 SARs from the reporting entities. Again, only the money transfer agencies – 800 and licensed financial institutions – seven provided SARs. There was none from the GRA or cambio dealers. During 2012, the FIU requested financial records from licensed financial institutions in respect of 29 suspicious subjects/activities. Again, there was no explication of what had become of these matters.
The two FIU reports also elaborated on the timeline which the government had available to it to comply with Caribbean Financial Action Task Force ( CFATF) recommendations. The 2011 report pointed out that Guyana’s anti-laundering regime was evaluated by the CFATF in January of 2010. The Mutual Evaluation Report (MER) was published on July 25, 2011 and there were 16 key and core recommendations and 33 others. Of the 16 core recommendations, Guyana was partially compliant with 10 but non-compliant with six. This was the exact situation in the 2012 report meaning that for the years 2011 and 2012 the government failed to achieve greater compliance with the CFATF’s core recommendations.
The 2011 report also noted that having been rated as partially compliant or non-compliant on all 16 core recommendations, Guyana was considered to as a potential candidate for review by the International Cooperation Review Group (ICRG) which is a body within the Financial Action Task Force. It was therefore required to submit an action plan on the core recommendations with “realistic timelines” for corrective measures and to identify technical assistance and training needs. By the end of 2011, the report said that Guyana submitted the required documents. This however did not improve its 2012 year end position in relation to core recommendations.
In addressing this same process, the 2012 report said that Guyana attended a plenary meeting in Venezuela in November 2011 – 17 days before the general elections here – another meeting in El Salvador in May 2012 and another in the British Virgin Islands (BVI) in November 2012. At the BVI meeting, it was recommended that Guyana be moved to enhanced follow-up and report to the May 2013 plenary. A visit by a high level mission from the ICRG and the CFATF was also proposed. The 2012 FIU report said these recommendations were made “based on the fact that the majority of the deficiencies highlighted in the MER require legislative amendments, enactment of regulations and were not yet fully addressed”. It would mean that in the year following elections, the government did not lodge proposed amendments in Parliament.
At the BVI plenary, the 2012 FIU report said that Guyana was also requested to submit a written report on its accomplishments since May 2012 and a revised action plan for agreement by the ICRG assessors before December 31, 2012.
“The written report and revised Action Plan were submitted before the deadline. However, the ICRG Assessors did not agree with the timelines provided for the enactment of the legislative amendments as the country was not able to identify a date for the passage of the amendments by its Parliament. As such the Action Plan did not receive the mutual agreement of the ICRG and the country”, the FIU report said. It was only in 2013 that the government began to press the opposition for support for the passage of amended laws whereas this could have been presented in 2012.
The 2011 FIU report also revealed that it was only in November 2011 that Guyana sought to join the Egmont Group which is made up of Financial Intelligence Units. This group provides a forum for FIUs to improve the fight against money laundering. According to the 2012 FIU report, Guyana was still to become a member of the group as a country visit and assessment is required by Egmont.