Tax evasion, gold smuggling major sources of money laundering in Guyana

Feb 28, 2023 News

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…criminal activities involved US$2.2B in proceeds between 2016 to 2020 – Report

Kaieteur News – A report released late last year has found that gold smuggling, tax evasion and drug trafficking pose the highest threats for money laundering in Guyana. In fact, the estimated value of proceeds laundered in these areas between 2016 and 2020 is over US$2.2B.

A breakdown of this sum was outlined in Guyana’s second Money Laundering/ Terrorist Financing (ML/ TF) National Risk Assessment (NRA) Report. According to Attorney General and Minister of Legal Affairs, Anil Nandlall S.C, the NRA exercise was conducted in line with the Financial Action Task Force (FATF) Recommendation 1, which requires all countries on an ongoing basis, to identify, assess, and understand their money laundering and terrorist financing risks.

They must also apply preventative measures to mitigate the identified risks. The exercise had commenced in December 2019 and was conducted by a Working Group (WG) of over 70 persons representing over 40 public and private sector agencies in Guyana. The report on that process was made available for public perusal on October 31, 2022.

The report notes that the overall level of money laundering threat in Guyana is Medium High, due to the significant estimated value of proceeds of crime generated from predicate offences committed in Guyana, coupled with lack of convictions for money laundering over the years.

The document states that there are 20 serious offences listed as predicate in the Anti-Money Laundering and Countering the Financing of Terrorism Act. Based on analysis, the WG concluded that of the 20 predicate offences listed in the AML/CFT Act, the ones that are likely to see the highest level of money laundering activity are gold smuggling, tax evasion, illicit trafficking in narcotic drugs and psychotropic substances and fraud. The estimated value of the proceeds generated from these offences are approximately US$ 2.2 billion, US$ 19.5 million, US$ 13.4 million and US$ 8.4 million respectively for the period 2016 to 2020.

Although there were only two convictions over the assessed period which resulted in the confiscation of US$ 37,554, the Working Group said the estimated value of the proceeds related to this offence stands at US$ 2.2 billion. It said the estimated value of proceeds for smuggling including gold smuggling was calculated by the WG based on media reports.

In 2016, it was reported that 15,000 ounces of gold is smuggled out of Guyana weekly, while in 2017, a major gold smuggling racket was unearthed. The document outlines that the US Federal Bureau of Investigation (FBI) provided Guyana’s authorities with a list of persons who had taken gold to the JFK airport, New York, and declaring it there. Kaieteur News understands that the smuggling was made possible because Customs and other Gold Board documents were recycled along with seals. Hundreds of millions of dollars of profits were being made but little for Guyana.

Considering these factors, smuggling including gold smuggling represents a High Threat of money laundering in Guyana, the report states.

With respect to tax evasion over the 2016 to 2020 period, the Working Group said the Guyana Revenue Authority (GRA) confiscated approximately US$56,074 for failure to declare and dealing with goods to defraud revenue and duties. In addition, based on the value of suspicious transaction reports received by the Financial Intelligence Unit in relation to tax evasion, the WG estimated the value of the proceeds from this offence as over US$19 million. The Working Group said it therefore represents a High Threat of money laundering in Guyana.

On the issue of drug trafficking, the report notes that there are several agencies involved in combatting this offence such as the Guyana Police Force, GRA, Customs Anti-Narcotics Unit (CANU), the Special Organized Crime Unit, the FIU, and National Anti-Narcotic Agency (NANA). The estimated value of the proceeds generated from narcotic offences for the period 2016 to 2020 is approximately US$ 13.4 million. Although, the authorities investigated and prosecuted over 2,000 cases, the Working Group said there were only 586 convictions over the period, adding that authorities were only able to confiscate US$ 282,138 which includes currency and other movable property such as motor vehicles.

The WG also referenced the International Narcotics Control Strategy Report (INCSR) published by the United States’ Bureau of International Narcotics and Law Enforcement Affairs in March 2020. That document noted that “Guyana is a transit country for cocaine destined for the United States, Canada, the Caribbean, Europe, and West Africa. In fact, cocaine originating in Colombia is smuggled to Venezuela and onward to Guyana by sea or air. Smugglers also transit land borders and the shared river network with Brazil, Venezuela, and Suriname…”

It also states that drug traffickers exploit the country’s poorly monitored ports, remote airstrips, intricate river networks, porous land borders, as well as the permissive environment created as a result of corruption and the under-resourced security sector. Considering these factors, the Working Group said illicit trafficking in narcotic drugs and psychotropic substance represent a High Threat of money laundering in Guyana.

As it pertains to fraud, the Working Group said Law Enforcement Agencies detected or investigated 1,139 instances of fraud, resulting in 1,152 prosecutions and 302 convictions. In addition, the FIU made 7 disseminations to SOCU relating to suspected fraud occurring in Guyana. However, there were no reported seizures or restraint of property in relation to this offence. The Working Group said the estimated value of this crime is about US$8.4 million and therefore represents a high-risk area for the country.

RECOMMENDATIONS

Some of the recommendations put forward by the Working Group to address the existing Money Laundering and Terrorist Financing threats and vulnerabilities identified in the report include the development of an updated National Money Laundering and Terrorist Financing Policy and Strategy along with additional amendments to the AML/CFT Act and other legislation. Some of these proposed amendments have already been drafted/ passed (AMLCFT Amendment Act passed and signed off by the President, Dr. Mohamed Irfaan Ali, on August 11, 2022

Efforts to strengthen domestic cooperation and coordination among competent authorities concerning the development and implementation of AML/CFT activities are also ongoing. These, along with the report, no doubt ensure Guyana’s readiness for its Fourth Round Mutual Evaluation by the Caribbean Financial Action Taskforce (CFATF) which is scheduled for the third quarter of 2023.

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• Anil Nandlall S.C, Attorney General and Minister of Legal Affairs, Guyana, Money Laundering/ Terrorist Financing (ML/ TF) National Risk Assessment (NRA) Report, Working Group (WG)

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