Anti Money Laundering Law…Many entities fail to report suspicious transactions

Dec 01, 2013 News

Guyana’s Anti Money Laundering and Countering the Financing of Terrorism Act, identifies the Bank of Guyana as the supervisory authority for the reporting entities carrying on banking-type business, including cambios; the Securities Council for certain financial business, money-broking, share issue, unit trust and venture risk capital; and the Commissioner of Insurance responsibility for domestic and international insurance business.
“What is clear is that not only are many of the supervisory authorities not carrying out their statutory obligations.”
This is the view held by Financial Analyst, Christopher Ram, who adds that no supervisory authority has been named for a number of activities, including law and accounting.
“If we were serious about preventing money-laundering, we not only would have had supervisory authorities named for each class of activity or business: we would have insisted that they do their job.”
Ram, who in his latest writings on chrisram.net, said that as a result of the duality and uncertainty, of the 25 or so categories of reporting entities only two categories reported any suspicious transactions for the entire 2011 and 2012.
Of the 1,665 suspicious transactions reported in the two years, 1,644 reports were made by Money Transfer Agencies and the remainder by Licensed Financial Institutions (LFI’s).
Ram said, too, that the annual reports of the FIU listed only the first four of the more than 25 categories that ought to report suspicious transactions.
Unruly Cambios
According to Ram, while the low level of reporting by the LFI is surprising, the non-reporting of any suspicious transactions by the remaining categories is simply unbelievable.
He reminded that 2011 was an election year and money was passing through the accounts of politically exposed persons by the tens of millions of dollars.
“Were these reporting entities simply careless, negligent or evading their obligations to report suspicious money-laundering transactions of their customers, or worse, did they themselves engage in or facilitate such transactions, confident of the FIU’s ineptitude and/or negligence?”
Ram believes that the FIU is not the only failure. He adds that the central bank as the designated Supervisory Authority was expected to supervise compliance by the cambios with the requirements of key provisions of the Act.
“It needed no special audit or forensic skills to recognise that an overwhelming majority of the cambios were never established with a view to compliance…From all appearances, the Central Bank did little to rein in the cambios…To their eternal benefit, the cambios found the FIU even more inert and benevolent,” said Ram.
Politically Exposed
Ram also said that the Anti-Money Laundering Act also creates a category of persons it refers to as a “politically exposed person” and defines it to mean, “senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials, including family members or close associates of the politically exposed person whether that person is resident in Guyana or not.”
Reporting entities are required to pay particular attention to transactions with such persons including taking reasonable measures to establish the source of wealth and source of property, and conducting regular enhanced monitoring of the business relationship.
“Ironically, the two government officials who are empowered to declare an entity as a ‘specified entity’ are themselves politically exposed persons…Are they going to take such action against themselves, members of the Cabinet or their political party?”

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