Guyana’s blacklisting by the CFATF

So the inevitable has happened. The Caribbean Financial Action Task Force (CFATF) met in Miami last week to review individual countries’ efforts to deal with anti-money laundering and countering of terrorist financing. No doubt, the Guyana situation would have dominated the proceedings since it is yet to pass the relevant amendments to its legislation to bring it in line with the standard recommendations used to evaluate countries’ efforts to combat money laundering and terrorist financing, This was despite several warnings by the CFATF since 2011 of Guyana’s precarious position. At the end of the meeting, the regional body issued a statement calling on its 27 members of the Caribbean Basin Region to consider implementing further counter measures to protect their financial systems from the ongoing money laundering and terrorist financing risks emanating from Guyana.

Both the Government and the Opposition continue to trade blame for this latest development. For the benefit of readers, this article outlines the sequence of events over the years which has led to present state of affairs as regards our anti-money laundering efforts.

Early Attempts to Deal with Money Laundering

Our earliest attempt to dealing with money laundering began in 2000 when the Money Laundering (Prevention) Act was passed in the National Assembly. It was assented to by the President on March 29, 2000. In 2002, we joined the CFATF and in the process of doing so, we have committed ourselves to work collectively with the other members to put in place measures to address the issue of money laundering.

Accountability WatchIn late 2003, we established the Financial Intelligence Unit (FIU) with the appointment of a Director. We were, however, disappointed that very little happened during the period 2000 to 2006, as there were no arrests and prosecutions nor were periodic reports of the FIU prepared and tabled in the Assembly.

In October 2006, the CFATF issued its first evaluation report on our country. The report highlighted the absence of legislation on money laundering, clearly indicating that the above-mentioned Act was not an acceptable one. This was especially so since in the wake of the 9/11 attack on the Twin Towers in New York in 2001, most countries would have taken steps to incorporate the countering of terrorist financing within the framework of their anti-money laundering efforts.

Around the same time, the US Department of State issued its 2006 International Narcotic Control Strategy Report which considered our country a transshipment point for cocaine destined for North America, Europe and the Caribbean due mainly to poor economic, social and political conditions. The estimated annual income from this illicit activity was at least US$150 million, equivalent to 20 per cent of our reported gross domestic product.

New Legislation on Money Laundering and Terrorist Financing

In response to CFATF’s first evaluation report, the Government tabled new draft legislation in the National Assembly in January 2007. The Assembly referred it to a Parliamentary Select Committee chaired by the current Minister of Finance. After prolonged deliberations lasting for more than two years, the AML/CFT Act 2009 was passed. However, the CFATF’s third evaluation report dated 25 July 2011 was very critical of the Act. The main conclusion was that our legislation needed to be overhauled to bring it in conformity with the standard recommendations referred to above.

Media reports indicated that we were told that the steps we had taken were minimal and that our country remained in “expedited follow-up”, meaning that we were required to report at every meeting of the CFATF on progress made. In particular, concern continued to be raised about the functioning of FIU that had not produced any periodic reports nor were there any prosecutions. The FIU’s role is to monitor and apprehend businesses and individuals involved in filtering the proceeds of crime into the economy. It is the backbone to the AML/CFT Act since 30 of the 116 sections relate to its functioning. 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. By letter dated 10 April 2013 to the President, the CFATF referred to several warnings and references to earlier notifications of the precarious position to which our country 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, we were required to submit a comprehensive report to the May 2013 CFATF Plenary by 6 May 2013.

Efforts to Amend the AML/CFT Act

On 7 May 2013, the Government tabled the amendments in the National Assembly to address the shortcomings in the AML/CFT Act as highlighted by the CFATF. 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 this decision. Its position was that if the amendments were not approved by the 27 May deadline set by the CFATF, our country would be blacklisted. This would make it difficult to move funds in an out of Guyana for legitimate business purposes.

The combined Opposition felt that opportunity should be taken to carry out a more comprehensive review of the AML/CFT Act given the specific problems with which Guyana was faced. The Government offered that this demand could be dealt with later to avoid sanctions being imposed on Guyana. The Opposition, however, countered by stating the Government could not be trusted to keep its word. The work of the Committee was not without its challenges as the Government’s side stuck to its position of only addressing the shortcomings identified by the CFAFT. Matters came to a head as a result of which, the Committee’s work was abruptly brought to an end, and the related report finalized and presented to the National Assembly on 7 November 2013. It was therefore not surprising that for a second time the Assembly referred the proposed amendments back to the Select Committee to continue and finalise its review.

There were two other demands of the combined Opposition. APNU wanted the President to assent to all outstanding bills approved by the National Assembly. One of the contentious Bills relates to the establishment of a Local Government Commission as required by the Constitution. The President, however, contended that the Bill was unconstitutional. Several commentators have argued that the President is not the competent authority for deciding on the constitutionality of a Bill. Rather, it for the Courts to decide.

The Alliance for Change, on the other hand, argued for the establishment of the Public Procurement Commission mandated by the constitutional amendment of 2001. The AFC’s position was that:

  • The proceeds from corrupt activities facilitate money laundering;
  • The work of the Commission is likely to reduce significantly the perception about the levels of corruption in Guyana; and
  • The same urgency is needed for the appointment of the members of the Commission.

Once established, the Procurement Commission will oversee the award of contracts for goods and services and the execution of works, estimated at approximately 70 per cent of the national budget. It will replace the Cabinet’s involvement in the procurement process. The Government, however, is adamant that the Cabinet’s involvement should remain.

 Conclusion

It is indeed very regrettable that our country has been blacklisted as a result of the continuing stalemate with regard to the passage of amendments to the AML/CFT Act, with little prospect of a compromise from our elected leaders. There is no doubt that there is merit in having strong legislation to deal with money laundering; and in tackling corruption in the award of public contracts through the establishment of the Public Procurement Commission.

The Government’s offer to have its version of the amendments passed in the National Assembly, with a commitment that the other aspects of the legislation with which the Opposition has concerns, will be dealt with at a later stage, is not an unreasonable demand. However, there can be no denying that we have been extremely delinquent for several years now in ensuring that we have in place strong and effective legislation to deal with money laundering. It was only when the “riot act” was read to us that we decided to do something about it. The Government’s insistence that Cabinet should continue to be involved in the procurement process is to be viewed against the background that under this arrangement there are so many allegations of improper award of public contracts, sub-standard work being performed, undue delays, and overpayments to contractors. In addition, many public officials are flaunting unexplained wealth in front of our very eyes with impunity. The Government was also a party to the 2001 constitutional amendment that removed Cabinet’s involvement, placing it in the hands of a Commission. Regrettably, after 12 years, the Commission is yet to be established.

In the aftermath of the November 2011 elections, our political culture has changed from one of cooperation, compromise and trust; to one of resistance, confrontation and distrust. Our politicians are yet to come to terms with the reality of the new dispensation. The citizens of this country have placed the management of the affairs of the State in the hands of one political group. At the same time, they provide some measure of checks and balances on the Executive through control of the Legislature by the other political group, albeit in combined form. This is unprecedented in the history of this country. In a display of political maturity and wisdom, our leaders must rise to the challenge, and in the spirit of goodwill and compromise do what is best for the country. The stalemate as regards the proposed amendments to the AML/CFT Act represents collateral damage arising out of a bigger issue with which we are yet to come to grips – putting the public interest first. It is not too late to do so.

Around the Web

Comments