THE FIU AND PROSECUTIONS

Mar 29, 2014 Features / Columnists, Peeping Tom

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A Partnership for National Unity (APNU) has taken a position in relation to the draft Anti Money Laundering and the Countering of the Financing of Terrorism Bill (AMLCFTB). APNU is saying that there is need for stronger enforcement.
The need for stronger enforcement is based on the fact that since the original AMLCFTB was passed there have been few prosecutions for money laundering in Guyana. APNU is therefore suggesting that in order to increase the chances of prosecution and successful prosecution there is a need for stronger enforcement measures within the law.
As such it proposed certain amendments to the draft law. Amongst the proposed amendments by APNU is one relating to granting powers to Police and Customs officers to stop, search and detain currency above a certain limit.
The idea here is that these powers would lead to increased arrests and thus increased prosecution. It is a highly questionable premise and one that can lead to the criminalization of cash, abuse of citizens’ rights and increased corruption within the Customs and Police.
Another proposal by APNU is for greater independence of the Financial Intelligence Unit (FIU). Presumably, the greater the independence of the FIU, the more cases it is likely to make. This again is another highly contestable premise.
Why is it highly contestable? Well for one, the role of the FIUs is not so much a prosecuting arm as it is an intelligence gathering unit. An FIU collects reports of suspicious transactions from the commercial banks and other financial institutions. It studies these red flags to see the emergence of patterns suggesting the illicit use of funds.
If the FIU is convinced that there is money laundering, it will gather more evidence and then forward these to the government agency that is responsible for assembling a case against the suspected money launderer.
Unlike what APNU may believe, the role of the FIU is not about undertaking the prosecution. That is for the Police and the DPP.
Thus, any belief on the part of APNU that by making the FIU more independent will increase the number of prosecutions made by the FIU is a misplaced notion. The FIU has to pass the evidence to the investigating arm of the State.
In fact, if APNU had studied the FIUs in other Caribbean jurisdictions, they would have observed that their primary function is to receive reports of suspicious transactions from the banks and financial institutions.
The organizational structures of most of the FIUs in the Caribbean provide for prosecution outside of the FIUs. In some jurisdictions, the organizational structure has a division dealing with prosecutions but these are confined to building prima facie cases to forward to the State prosecuting arm.
In other words, the emphasis of the FIUs is to receive reports of suspicious transactions from Banks and financial institutions.
If APNU were serious about strengthening the FIU, it should have considered proposing powers under the law for the Guyana Revenue Authority to release its so-called confidential data on taxpayers to the FIU. Not many money launderers are going to wash their funds through the commercial banks. Not these days with all the regulations of trace and reporting that was mentioned in yesterday’s column.
To wash money through the banks would be like advertising their illegal business. It would lead to prosecution as was the case in one instance in Guyana where a young lady was hauled before the courts for allowing her bank account to be used for suspected laundering.
A great many funds are laundered through commercial imports and through real estate investments. The GRA is privy to the declarations of  the assets of all taxpayers in this country and it is therefore in a far better position than the banks to point to cases in which the assets of someone is beyond the type of business they are doing.
But the GRA is hiding under its obligation to keep taxpayers’ information confidential. However, this obligation is not absolute. The courts can demand the GRA to produce taxpayers’ information.
If APNU seriously wanted to strengthen the enforcement capability of the FIU, it would have been much better for it to propose that the FIU, with permission of the Courts, have the GRA provide information on the assets of certain taxpayers suspected on laundering money.
Instead, however, APNU is of the view that enforcement has to be strengthened by granting draconian powers to the police and by insulating the appointment of the Head of the FIU from political interference.
In respect to the latter, APNU is proposing that the Parliament appoints the Head of the FIU. Now this is a most novel suggestion for which there is no precedent in Guyana or in the Caribbean. And ironically by asking politicians to appoint the Head of the FIU, APNU’s proposal will end up politicizing rather than de-politicizing the appointment.
If Parliament has to appoint the Head of the FIU, no one may end up being appointed because such appointments will most likely require a requisite two thirds majority of the House which may never be attained. In any event, it is not for Parliament to make any appointments within the government system.
As a compromise, the Ramotar administration has reportedly urged a model similar to what obtains in Barbados. Under the Barbadian model, the FIU is overseen by an Anti- Money Laundering Authority (AMLA) comprising of ten members, namely:
·Chairperson – from the University of the West Indies
·Deputy Chairperson – from the private sector
·The Solicitor General, or representative
·The Commissioner of Police or representative
·The Commissioner of Inland Revenue or representative
·The Comptroller of Customs or representative
·The Supervisor of Insurance or representative
·The Registrar of Corporate Affairs and Intellectual Property, or representative
· Head of the Banking and Supervision Department, Central Bank of Barbados
· Two additional members from the private sector with experience in law and insurance regulation.
This is not a bad model for Guyana to imitate. But even with such a model, it should never be assumed that the role of the FIU is to prosecute. The role of the FIU is to gather intelligence and evidence to pass on to the prosecuting arm of the State.
As such, APNU’s desire to strengthen the FIU will not necessarily improve the chances of prosecutions and does not all address the perceived weaknesses of the prosecution of financial crimes by the police and the DPP.  (To be continued)

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