Important Disclaimer: The original version of this article can be found in the Inter-American Dialogue’s biweekly Financial Services Advisor newsletter, available at: http://www.thedialogue.org/uploads/LAA/FSA/2014/FSA140319.pdf
The Caribbean Community Secretariat last month expressed concern at Guyana's failure to pass its Anti-Money Laundering and Countering the Financing of Terrorism Act, a measure that the secretary general of the Organization of American States has also called upon Guyana to approve. The Caribbean Financial Action Task Force has blacklisted the country over the matter. What does the legislation aim to achieve, and why is it being resisted? How will the wrangling affect financial services companies in Guyana and the country's economy overall? Is Guyana's inaction a blow to coordinating anti-money laundering efforts in the Caribbean?
Earl Jarrett, General Manager, Jamaica National Building Society: "The fight against money laundering and the financing of terrorism depends on a global network of financial institutions which all prescribe to a common standard that verifies the identity of customers, the source of funds trans-acted over financial networks and the close monitoring of suspicious transactions of any kind. The Anti-Money Laundering and Counter Finance of Terrorism (AML/CFT) Act effectively seeks to close the artery which feeds criminal activity and, in many instances, contributes to the murder of innocent citizens. The fight against the use of the global financial network for criminal activity is as effective as the weakest link in this chain of effort. It is therefore important for every nation state, no matter how small, to participate fully by passing the appropriate legislation to allow financial institutions to monitor and report on transactions, as part of their efforts to combat a global scourge. From public reports it would seem that lawmakers in Guyana are being frustrated as passage of the AML/CFT law is being leveraged as a negotiating tool by opposition political parties. I submit that of all the laws, the AML/CFT law is not a law to be used for political maneuvering. The implications for Guyana are grave as it could find itself locked out of the global financial network and unable to perform routine international financial transactions. Guyana has the third largest inflow of remittances in the Caribbean, and a consequence of the country's failure to pass the law could disrupt this important lifeline for citizens, as international banks may be obliged to cease corresponding and remittance relationships with entities in Guyana. The entire LAC must see this action in Guyana as one that impacts negatively on the significant efforts to demonstrate our commitment to protect the region from criminal activity."
Ronald Sanders, senior fellow at London University and former chairman of the Caribbean Financial Action Task Force: "Adoption of AML/CFT legislation is complicated by Guyana's internal politics. Donald Ramotar was elected president in 2011 by a plurality, but majority votes for the legislature went to two opposition parties. Thus, the government cannot implement legislation not supported by the opposition parties. The legislation, proposed initially by the Caribbean Financial Action Force (CFATF), is standard throughout the Caribbean. Its acceptance would be the first step to bring Guyana into compliance with anti-money laundering and counterterrorism financing rules established by the Financial Action Task Force (FATF) and supervised by the International Monetary Fund. If Guyana continues not to adopt the legislation and not to establish other compliance requirements, it will be blacklisted not only by the member-states of CFATF, which has already been done, but also globally by the FATF. This means that all financial transactions with Guyana will be subject to expensive scrutiny that correspondent banks worldwide would not undertake—some have already closed relations with Guyana's banks. Businesses, trade, investment and even simple cross border transactions will be adversely affected with consequential harm to the economy as a whole. The opposition parties have refused to pass the AML/CFT legislation unless the government amends it to satisfy their desire for greater parliamentary oversight of its machinery and less authority in the hands of government ministers. They have also tied support for the legislation to the president signing into law legislation that they have initiated unrelated to the AML/CFT bill. The two sides are now locked in a power struggle and are failing to compromise in the national interest. Failure to adopt the legislation will not affect other Caribbean countries except that the latter's banks and authorities will have to scrutinize transactions to avoid contamination that might arise from incidents of money-laundering from Guyana."
Ignacio M. Alvarez, of counsel at Diaz, Reus & Targ: "The Caribbean Financial Action Task Force (CFATF) has black-listed Guyana due to AML/CFT deficiencies and threatened further sanctions, unless the government implements needed legislative changes. Because Guyana's historically weak criminal justice system has also contributed to a favorable cli-mate for drug trafficking, smuggling, human trafficking and corruption, crimes that have a propensity of generating large amounts of illegal profits, the CFATF has taken a firmer stance with Guyana. As a result, the CFATF has been working with Guyana to implement an action plan with target dates to address the AML/CFT deficiencies that still existing despite Guyana's first AML/CFT Act of 2009. Due to a political dispute between political parties, however, the amended bill, which would have addressed these deficiencies, has been held up in Parliament because of the political parties' failure to agree on various amendments to the law. These include restructuring the Financial Intelligence Unit and setting the monetary thresholds needed in order for seizures to occur. The failure to pass these needed reforms before the May CFATF Plenary Meeting would lead to serious sanctions. This would be devastating to Guyana's financial services industry, potentially causing international banks to terminate their relationships with Guyanese counterparts. It would also cause other countries to bring greater scrutiny to bear on funds originating in Guyana. For a country whose industry is largely dependent on exporting natural resources, these sanctions could easily cripple the economy, as purchasers for their exports face greater challenges in conducting financial transactions with Guyana."
Jan Smith, director for Latin America at Edgar, Dunn and Co.: "The government and the opposition are locked in discussions over the AML/CFT bill and are using the debate as a platform to air political grievances. There is open speculation regarding how deep narcomoney and sheltering of Venezuelan political windfalls has already permeated. The parliamentary opposition has boxed itself in by attaching rigid demands for support of the AML/CFT that the majority PPP will block. These demands include the Public Procurement Commission (PPC), an amendment that would pave the way for ensuring fairness in the distribution of government con-tracts. The opposition interprets the PPP's unwillingness to accept the PPC as fear of being transparent. The PPP is holding the opposition responsible for the impasse and initial blacklisting and thereby deflecting responsibility for a softening economy. Although blacklisting has the objective of making it harder for illegal traders, the heaviest cost will fall on legal enterprises. It will affect the cost of processing international transactions and adversely affect trade and financial flows in the region. It will also affect the government's provision of goods and services. Many regional partners and financial institutions are reviewing the cost/benefit of doing business, and some, such as Citibank, have terminated relationships with local counterparts. The issue may be a thorn in the side of regional politics, but it is not regional failure. A failure of regional anti-money laundering efforts would be precisely the opposite scenario: to not have any legal recourse and tolerate the high risk of transacting with Guyana."