Category: Legislation

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Resolving the impasse over money laundering and terrorism prevention legislation

Introduction
The recommendation by the Caribbean Financial Action Task Force (CFATF) that its members must exercise caution in their financial transactions with Guyana leaves only a narrow window of a few months before the country becomes the object of heightened scrutiny and possible condemnation by the international Financial Action Task Force.

The decision by the CFATF is a direct consequence of the failure by the National Assembly of Guyana to pass the amendments to the Anti-Money Laundering and Combatting the Financing of Terrorism (Amendment) Bill 2013. Making the case for the Government, its spokespersons simply state that the amendments are what the CFATF has called for. The opposition parties and civil society have expressed concerns not only about the proposed amendments but about some of the provisions in the principal Act. Among the objections raised are provisions that are claimed to be in violation of the Constitution, the absence of a strong executing authority and the role of political operatives in the administration of the Act.
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Those FIU (non)reports – continued

The mandate
Now let us turn to the wider mandate of the FIU with respect to the prevention of money-laundering and combatting the financing of terrorism. The Act singles out Financial Institutions, and defines these along with Designated Non-financial Business or Profession in Schedule 1. Financial Institutions are mainly those engaged in any of the services normally provided by banks and other financial institutions while the second category includes casinos, real estate agents, dealers in precious metals, attorneys-at-law, notaries, other independent legal professionals and accountants engaged in certain specified activities and trustees.

The Act also defines as reporting entities persons carrying on a range of activities, also listed in Schedule 1, including the acceptance of deposits, granting of loans including consumer credit, financial leasing, money transfer agencies, cambios, pawn-broking, issuance of credit cards, travelers cheques, used car and car part dealers, real estate agents, betting shops, lotteries, and transactions undertaken by accountants and attorneys acting for clients in relation to specific activities, exporters and importers of valuable items and dealers in real estate.

Under pain of draconian penalties, financial institutions and reporting entities have serious and extensive obligations under the Act. For the purpose of this column, suffice it to say that reporting institutions and entities are required to maintain adequate records to enable the identification of their customers; to establish and maintain records of all transactions with full particulars of the customers and the transactions; to pay attention to all complex or unusual large business transactions; to monitor their business relationships with customers; to appoint a Compliance Officer to ensure compliance with the Act; to establish and maintain internal policies, procedures, controls and systems to implement the customer identification requirements and recordkeeping and retention requirements; to establish an audit function to test the policies and procedures; and to train their officers, employees and agents to recognise suspicious transactions; and most importantly to submit to the FIU any transaction which they suspect is connected to the proceeds of criminal activity, money laundering or terrorist financing.

Despite defining Designated Non-financial Business or Profession in Schedule 1, the term is not used anywhere in the Act.
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Those FIU (non)reports

Introduction
Following questions raised by the parliamentary opposition, the Minister of Finance earlier this month presented to the National Assembly what purported to be annual reports of the Financial Intelligence Unit headed by Mr. Paul Geer, Director. Such reports are required under the Anti-Money Laundering and the Combatting of Financing of Terrorism Act 2009 (AMLCFTA). The Act was passed on April 30 2009 but not assented to until August 14 of that year, close to three months beyond the twenty-one days allowed by the Constitution.

Let us look briefly at the requirements of the Act in respect of annual reports and accompanying audited financial statements. Section 9 requires the Director “to keep proper accounts and other records.” Sections 9 and 110 set out the timeline for preparing auditing, and tabling in the National Assembly the financial statements and report of the Financial Intelligence Unit (FIU) as follows:

Deadline Action required
By March 31 Prepare the statement of accounts for the preceding year
None specified Submit to Auditor General for audit
No later than June 30 Director to submit to the Minister of Finance a report comprising information on the financial affairs, operations and performance of the Financial Intelligence Unit, including the amounts paid into the Consolidated Fund under the Act, along with the audited annual statements of accounts.
No later than one month following receipt Minister of Finance to lay the documents in the National Assembly.

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Mr Nandlall should provide the basis for the claim to these astounding powers

According to the Guyana Chronicle of Saturday, October 26, 2013, Mr. Anil Nandlall, Attorney General, commenting on what he referred to as a gag order by a judge in a pending legal matter in the High Court states: “In our legal system, the holder of the office of Attorney General is the protector of the public’s legal interest and the defender of the Constitution of Guyana…” These are astounding powers with which Mr. Nandlall seeks to clothe himself, apparently simply by stating so. He has no such role, functions or powers.

On the issue in which he gratuitously inserts himself, Mr. Nandlall cites principles and authorities mainly from the UK which does not have a written constitution and would therefore be of doubtful authority, and from India, which does. Yet his singular acknowledgement to Guyana is a case of dubious relevance to the substance of what he attempted to address.

Incredibly, while the post of Attorney General is a creation of the Constitution of Guyana, Mr. Nandlall omits to cite Article 112 which sets out in clear language the role of the Attorney General. That article states:

“There shall be an Attorney General of Guyana who shall be the principal legal adviser to the Government of Guyana and who shall be appointed by the President.”

Mr. Nandlall should now assist Guyanese by identifying for us those Articles of the Constitution which in his learned opinion make him the protector of the public’s legal interest and the defender of the Constitution of Guyana. And he must also explain to us his failure to defend our interest in the several violations of mandatory provisions of the Constitution including the requirements for an Ombudsman (Article 191), Public Procurement Commission (Article 121 W) and local government elections (Article 71).

Neither Mr. Nandlall nor his Chambers appeared in the matter in which the Judge made the order and unless he has apprised himself of both text and context of the order it seems completely out of place for him to describe the Judge’s ruling as a “misuse, if not an abuse” of a legal principle. Assuming that he was approached in whatever capacity by the party against whom the order was made, the proper course of action for him was to refer the party to their legal counsel to seek such redress as is available under the law.

I hope that there is one thing that Mr. Nandlall and I will agree on, and that is, the importance of restoring dignity to the office of the Attorney General to which much damage has been done over the past decade.

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Money-Laundering not in recess

Amaila Update
Late on Friday evening, Mr. Winston Brassington, the Government’s point man in the Amaila Falls Hydroelectric Project (AFHP) announced that Sithe Global was exiting the project. Later that evening the President was reported as stating his Government would continue working to bring the Project to reality. Sithe would only say that it would issue a statement on Sunday August 11.

Meanwhile I had an initial but extensive engagement on Tuesday with Mr. Brassington, his two Amaila technical advisers and Mr. Kit Nascimento, PR agent of Guyana Power & Light Inc. on the scores of concerns I have had with the project. At the end of that session we agreed to meet again and in anticipation of that further meeting I sent a number of questions to Mr. Brassington. I had given an undertaking that I would reserve further statements on the project pending the meeting with Mr. Brassington and his team. Accordingly I am withholding any comments on the announcement of Sithe’s withdrawal from the project.

Introduction
The National Assembly has gone into recess leaving further consideration of the Anti-Money Laundering and Countering of Financing of Terrorism (Amendment) Bill before the Special Select Committee of the National Assembly until at least early October. The logic it seems is that if the deficiencies in the Act could have waited a year or two what harm can a couple of months do? Perhaps illogically, the answer is “a lot”. Trading blame by the various sides in the National Assembly does nothing to assuage the Caribbean Financial Action Task Force (CFATF), of which Guyana is a member, about Guyana’s consistent non-compliance with its obligations to have the appropriate legislative framework in place, supported by a strong regulatory body to oversee relevant bodies and enforce the legislation.

That the government has failed massively on each of these measures has not restrained the language used by Dr. Ashni Singh, Minister of Finance to describe the conduct of his colleagues on the opposite side in the National Assembly. In March this year, he described the AFC as “shamelessly irresponsible” accusing it of holding the nation “hostage” to derive concessions on, in his view, the small matter of the Public Procurement Commission. Of course many Guyanese regard the establishment of the Commission not only as a constitutional imperative but as a critical governance and anti-corruption matter. Now, as members of the National Assembly shut shop and head for their summer vacation their decision is being described as “unconscionable”.
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