The FATF and us

May 24, 2013 Editorial

Now that we have gone past wondering whether the Opposition would or would not support the government in approving their recommendations embodied in the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Act (they did not) maybe we can now examine what the brouhaha was all about.
The AML/CFT Act is the result of pressures from the International Financial Action Task Force (FATF), an initiative of the G-7 countries that was launched in 1989. Overtly it was supposed to put a dent on money laundering, which had been defined by the UN as “The conversion or transfer of property, knowing that such property is the proceeds of crime, for the purpose of concealing or disguising the illicit origin of the property or of helping any person who is involved in the commission of the predicate offence to evade the legal consequences of his or her action; or the concealment or disguise of the true nature, source, location, disposition, movement or ownership of or rights with respect to property, knowing that such property is the proceeds of crime”. (Article 6, UN Convention Against Transnational Organized Crime).
Many believe that because money was being laundered by offshore banks that had sprung up in several smaller states, especially in the Caribbean, another reason for FATF was to eliminate these banks. The latter were processing huge amounts of funds for citizens of G-7 and were using the offshore banks as tax havens. Switzerland, however, had been performing this role for centuries without complaints. But with the clout of G-7, and soon G-20, behind it, FATF – an intergovernmental body now with thirty-five members and several observer bodies – soon drafted a set of forty recommendations that were supposed to be followed by governments in enacting legislation to combat money laundering.
After 9/11, recommendations to combat terrorism were added to the list since it was concluded that terrorists used many of the same practices and mechanisms as criminals did to hide their sources of funding. FATF’s eventual 40+9 recommendations now form the backbone of the legislation that the government was attempting to enact. But more effective than the recommendations, was the “non-compliance” list issued by FATF which included countries that the organisation felt had not done enough to comply with its recommendations. It became known and feared as the “FATF Blacklist”, because the World Bank, the IMF, and most regional banks such as the Asian Development Bank, used the recommendations and the list as a global benchmark for their loans.
The Caribbean Financial Action Task Force (CFATF) is an affiliate of the FATF and had been working with the government to get its legislation to be FATF-compliant. It was a letter from this organisation that had not been circulated to the Opposition and for which President Ramotar apologised. The meeting being held by the FATF in Nicaragua between May 27-30 is supposed to pronounce on our compliance and if they so find, could have us blacklisted.
Basically the FATF standards require us to “criminalise money laundering, terrorist financing and proliferation financing in accordance with international law; freeze terrorist assets and confiscate the proceeds of crime; establish a financial intelligence unit to collect, analyse, evaluate and disseminate suspicious transaction reports from financial institutions and other reporting entities; supervise those financial institutions and other reporting entities to ensure compliance with customer due diligence and other requirements contained in the standards; and ensure that comprehensive and effective mechanisms are in place to cooperate effectively on the international level given the growing international dimension to these crimes.”
Apart from the concerns over giving one more supra-national organisation the power to intrude into our local sovereignty, law-abiding Guyanese, including our Opposition, should not have any problems with these recommendations. In fact with the established reputation of our country as a drug trafficking conduit, it is in our interest to have ourselves vetted. Accusations of official complicity with “drug lords” and other unsavoury characters would also be scrutinised under a powerful searchlight.

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The FATF and us

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