Procurement Commission goes hand-in-hand with Anti-Money Laundering Legislation

By Dominic Gaskin, AFC Treasurer

Guyana has a dismal track record when it comes to good governance and the implementation of laws and regulations. The result is that we have become an extremely corrupt country with widespread criminality at all levels. Much of the money entering and circulating in our economy each year represents the proceeds of criminal activities such as narco-trafficking, gun running, illegal fuel importation or undeclared gold exportation. A lot of the property-purchasing and construction taking place, whether residential or commercial, is for the purpose of diluting inexplicable wealth into transported holdings. Many have turned a blind eye to this situation, quietly enjoying the trickle-down benefits of all these activities, while ignoring the tremendous long-term harm accruing to our society and our economy. The AFC is particularly concerned with the effects of this criminality on the Government of Guyana, and the scope for collusion that it presents. Tasked with implementing policies to fight crime, while at the same time being the biggest spender within our economy, the Government is a vulnerable entity when it comes to facilitating the process of money laundering. The current political impasse surrounding the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Amendment Bill has brought into focus the nexus between corrupt governance and organized crime. The Alliance For Change has taken a clear position, linking its support for the Bill to the establishment of the constitutionally mandated Public Procurement Commission designed to monitor and regulate the awarding of Government contracts. This is not optional. This is a constitutional requirement which the Government has refused to implement for over a decade. The AFC believes that the Guyanese public deserves the benefits of both an effective and independent Public Procurement Commission and strong anti-money laundering legislation. The Government has now taken to scare-mongering in order to get the AFC to back down from its position, and is targeting the business community with its doomsday warnings. Some have joined them in their efforts, without so much as acknowledging the option for Guyana to have both the AML/CFT legislation and a Public Procurement Commission. Their only concern is for the quick passage of the AML/CFT Bill in order for Guyana to avoid being black-listed by the international community. Unfortunately it is not that simple. The issue of Guyana’s compliance or non-compliance has to do with a list of forty-nine recommendations, developed by the Paris-based Financial Action Task Force (FATF), and recognized as the international standard for combating money laundering and the financing of terrorism.  The Caribbean Financial Action Task Force (CFATF) is an associate member of the FATF and has endorsed these recommendations.  Its main objective is to achieve the effective implementation of, and compliance with, the FATF recommendations and, in doing so, it is guided by comprehensive Mutual Evaluation Reports (MERs) carried out for each of its member countries. The CFATF holds two plenary meetings each year, one in May and the other in November, at which these MERs are adopted, additional reports presented, and decisions made regarding follow-up processes required for each member. It subsequently issues a Public Statement identifying those members whose strategic deficiencies pose a threat to the international financial system with regard to money laundering and financing of terrorism. On May 30 of this year, after its plenary meeting in Nicaragua, CFATF in its Public Statement described Belize and Guyana as “Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not complied with their Action Plan developed with the CFATF to address the deficiencies.” It also called on its members to “consider the risks arising from the deficiencies associated with each jurisdiction”.  In addition, the statement warned, “If Guyana does not take specific steps by November 2013, then the CFATF will identify Guyana as not taking sufficient steps to address its AML/CFT deficiencies and will take the additional steps of calling upon its Members to consider implementing counter measures to protect their financial systems from the ongoing money laundering and terrorist financing risks emanating from Guyana, and at that time CFATF will consider referring Guyana to the Financial Action Task Force International Cooperation Review Group (FATF ICRG).” Before attempting to decipher what these seemingly vague statements may augur for the average Guyanese citizen, it would be useful to examine the path chosen by our Government that landed us in this predicament in the first place. Guyana joined CFATF in 2002 and had its first mutual evaluation as part of CFATF’s second round of Mutual Evaluations in 2006. Guyana’s next Mutual Evaluation Report was adopted at CFATF’s May 2011 plenary meeting, and was based on an on-site visit to Guyana by an evaluation team during the period 18–29 January 2010. The team met officials and representatives of all relevant Guyana government agencies as well as the private sector. In that report, Guyana was rated partially compliant or non-compliant on a total of forty-one recommendations, and as a result was placed on CFATF’s “expedited follow-up” regime and ordered to report at every plenary meeting on progress made to correct the deficiencies identified in the MER. It needs to be noted here that the follow-up process is only applicable to members whose ratings show significant deficiencies. Where the failings identified in the reports are particularly serious, the plenary can decide on a more expedited timetable for follow-up reports, rather than the two-year norm. This was the case with Guyana. In successive follow-up reports, Guyana’s improvements were not considered substantial, and the country has now been placed in enhanced follow-up, which is a further downgrade in the follow-up process. The latest report refers to the “high level mission” which visited Guyana in March of this year. It needs to be stressed that a “high-level mission” represents one of the final steps in CFATF’s process of dealing with non-compliant members, with the next step being the above mentioned Public Statement. Then came the famous letter from CFATF (deliberately withheld from the political opposition) dated April 10, 2013 and addressed to President Ramotar, expressing, among other things, concern that his government had been unable to provide the high-level mission with a timeframe for passing the relevant legislation. Less than two weeks later, on April 22, the Anti-Money Laundering and Countering Financing of Terrorism (Amendment) Bill was tabled in the National Assembly. From that point on the Government assumed a sense of urgency, and began issuing repeated warnings about the consequences of not approving the bill before the next CFATF meeting at the end of May. But for Guyana to have been placed on expedited follow-up by CFATF in 2011 and then moved through the various stages of enhanced follow-ups, is a clear indication that the PPP-C Government has failed over many, many years to effectively address the issues of money laundering and financing of terrorism. The Government of Guyana would have been aware of the FATF recommendations for over a decade and could have done a whole lot more to enact adequate legislation and to strengthen its monitoring, investigating and enforcing capabilities to achieve better compliance ratings. Instead, it dragged its feet and stalled, while pretending to the international bodies that it was serious about combating money laundering and financing of terrorism. Now that it has suddenly realized that FATF and CFATF are more than just talk shops and are capable of sanctioning non-compliant countries, it is seeking to blame the political opposition for what may happen when this kicks in. While the Anti-Money Laundering and Countering Financing of Terrorism (Amendment) Bill is supposed to address a significant number of the recommendations with which Guyana is not in compliance, its passage alone will not be sufficient to immediately remove Guyana from the follow-up process, since other deficiencies will remain. It is also unlikely that this PPP-C Government, which has allowed lawlessness to pervade its society and an informal economy to boom to its current extent, can suddenly pull the plug on this fountain of wealth without affecting many of its friends and constituents. One is therefore forced to wonder whether the PPP-C has any intention of Guyana’s becoming fully compliant with the recommendations of the CFATF. It is as a result of the Government’s handling of this matter over a considerable period of time, and not simply the non-passage of untested legislation, that Guyana has been cited in a CFATF Public Statement. The immediate consequence of this is that Guyana may now face enhanced due diligence for financial transactions with reporting entities in compliant foreign countries. In other words, financial institutions in more compliant countries may be legally bound to require additional documentation when transferring money to or from Guyana. It is possible that the CFATF Public Statement is specifically directed at CFATF member countries and that, for now, only these countries may be required to consider the money laundering or financing of terrorism risks arising from Guyana’s deficiencies. What happens next depends on CFATF’s November plenary meeting. If, as is quite likely, Guyana is deemed not to have taken sufficient steps to address its identified deficiencies, then the next Public Statement will call on members to consider implementing counter measures to protect their financial systems from the ongoing money laundering and terrorist financing risks emanating from Guyana. These counter measures may differ from the enhanced due diligence measures currently recommended, depending on the guidelines in place in individual jurisdictions. Again, this call may be limited to CFATF members.  However, should CFATF make good on its threat to refer Guyana to the Financial Action Task Force International Cooperation Review Group (FATF ICRG), then Guyana will receive the attention of a much larger number of countries. FATF issues two levels of statements for its members’ consideration following its thrice yearly meetings. The first is the Public Statement which lists (currently thirteen) countries with strategic deficiencies. The second is known as the “Improving Global AML/CFT Compliance: On-going Process” document and lists countries which have provided a “written high-level political commitment to address the identified deficiencies”. This list currently comprises twenty countries. Trinidad and Tobago was removed from this list one year ago after it made significant progress in improving its AML/CFT regime. Interested persons may wish to enquire from the business community in that country what the effects were of being listed as deficient by FATF. The AFC urges the Guyanese public to insist on the establishment of the Public Procurement Commission. It also calls on the Private Sector Commission and the Insurance Association of Guyana to issue a statement, of similar proportions to their full-page advertisements for passage of the AML/CFT bill, in support of the establishment of the Public Procurement Commission as provided for in the Public Procurement Act of 2003.