Lack of legislation, resources result in no arrests for money laundering --US Drug Report
Kaieteur News
March 2, 2007
Drug trafficking and money laundering appear to be benefiting Guyana 's economy, particularly in the construction sector. This is according to the 2007 US Drug Report on Guyana .
According to the Report, while Guyana is neither an important regional nor offshore financial centre, nor does it have any free trade zones, the scale of money laundering is thought to be large, relative to the size of the economy, with some experts estimating that the informal economy is 40 to 60 percent of the size of the formal sector.
The Report said that investigating and prosecuting money laundering cases is not a priority for law enforcement.
According to the Report, the lack of adequate legislation and resources has resulted in the Government of Guyana making no arrests or prosecutions for money laundering in 2006.
The Money Laundering Prevention Act of 2000 criminalises money laundering related to narcotics trafficking, illicit trafficking of firearms, extortion, corruption, bribery, fraud, counterfeiting and forgery.
The Act does not specifically cover the financing of terrorism or all serious crimes in its list of offenses, according to the Report.
Licensed financial institutions—including banks, securities brokers, exchange houses, credit unions, building societies and trusts—are required to report suspicious transactions to Guyana 's Financial Intelligence Unit (FIU), although they are left to determine thresholds individually, according to banking best practices.
Financial institutions must keep records of suspicious transaction reports (STRs) for six years.
The law also requires that the cross-border transportation of currency exceeding US$10,000 be reported. The legislation includes provisions regarding confidentiality in the reporting process, good faith reporting, penalties for destroying records related to an investigation or disclosing investigations, and international cooperation.
The Money Laundering Prevention Act establishes the Guyana Revenue Authority, the Customs Anti-Narcotics Unit, the Attorney General, Director of Public Prosecutions, and the FIU as the authorities responsible for investigating financial crimes.
The Report says that the Government's anti-money laundering regime is ineffective, and the implementing regulations of the Money Laundering Prevention Act are inadequate.
“ Guyana 's central bank, the Bank of Guyana, lacks the capacity to fully execute its mandate to supervise financial institutions for compliance with anti-money laundering provisions.
“There have been no money laundering prosecutions to date, and it is unclear if a conviction for the predicate offence is necessary to obtain a money laundering conviction.
“The Financial Intelligence Unit, established within the Ministry of Finance in 2003, is currently a one-person organisation and is dependent upon the Ministry for its budget and office space,” the Report stated.
It added that although the FIU may request additional information from obligated entities, its analytical capabilities are severely limited by its inability to access the law enforcement data and its lack of authority to exchange information with foreign FIUs.
The Guyana Government, the Report said, does not release statistics on the number of suspicious transaction reports received by the FIU, although the requirement to make these statistics available to relevant authorities is mandated by the Financial Action Task Force (FATF).
In order to improve the Government's anti-money laundering regime, the FIU has prepared drafts of legislation criminalising the financing of terrorism and expanding the scope of the money laundering offence.
The new legislation is also expected to provide for oversight of export industries, the insurance industry, real estate and alternative remittance systems.
The draft Money Laundering Act failed to make the legislative agenda before the dissolution of Parliament in May 2006.
The US Drug Report further stated that last January, the National Assembly passed the Gambling Prevention (Amendment) Bill, which legalises casino gambling.
The Bill establishes a Gaming Authority authorised to issue casino licenses to new luxury hotels or resort complexes with a minimum of 150 rooms.
Vocal opposition to the Bill from religious groups, opposition parties and the public, included concerns that casino gambling would provide a front for money launderers.
The Money Laundering Prevention Act provides for seizure of assets derived as proceeds of crime, including money, investments, and real and personal property.
However, according to the Report, guidelines for implementing seizures and forfeitures have not been finalised.
Forfeiture and seizure mechanisms are conviction-based, and may be carried out by the Office of the Director of Public Prosecutions if a court order is obtained.
Guyana is a member of the OAS Inter-American Drug Abuse Control Commission (OAS/CICAD) Experts Group to Control Money Laundering and the Caribbean Financial Action Task Force (CFATF).
The country underwent its second CFATF mutual evaluation in 2004, and the results of the evaluation were presented at the CFATF plenary in October 2006.
The mutual evaluation team found the Government to be noncompliant or materially noncompliant with approximately half of the CFATF recommendations.
Guyana is also a party to the 1988 UN Drug Convention and the UN Convention against Transnational Organised Crime.
Meanwhile, the Report said that the Ministry of Foreign Affairs and the Bank of Guyana continue to assist U.S. efforts to combat terrorist financing by working towards compliance with relevant United Nations Security Council Resolutions (UNSCRs).
In 2001, the Bank of Guyana, the sole financial regulator as designated by the Financial Institutions Act of March 1995, issued orders to all licensed financial institutions expressly instructing the freezing of all financial assets of terrorists, terrorist organisations, and individuals and entities associated with terrorists and their organizations.
Guyana has no domestic laws authorising the freezing of terrorist assets, but the Government created a special committee on the implementation of UNSCRs, co-chaired by the Head of the Presidential Secretariat and the Director General of the Ministry of Foreign Affairs.
“To date, the procedures have not been tested, as no terrorist assets have been identified in Guyana ,” the Report explained.
The FIU Director also disseminates the names of suspected terrorists and terrorist organisations listed on the UN 1267 Sanctions Committee's consolidated list, to relevant financial institutions.
“ Guyana has not signed the UN International Convention for the Suppression of the Financing of Terrorism or the UN Convention against Corruption. The GOG has signed, but not yet ratified, the Inter-American Convention against Terrorism,” the Report added.
The Report recommended that the Guyana Government should introduce the Draft Legislation on money laundering to Parliament early in the legislative session.
It also advised that the Government should provide greater autonomy for the FIU by making it an independent unit with its own budget and office space, enable the FIU to access law enforcement data, and ensure that the FIU has the operational capacity to meet the membership requirements of the Egmont Group and other international standards.
It added that Guyana should provide appropriate resources and awareness training to its regulatory, law enforcement and prosecutorial personnel, and establish procedures for asset seizure and forfeiture.
“Now that Guyana has legalised casino gambling, the Government should ensure that the necessary anti-money laundering regulations are extended to the gaming sector.
“ Guyana should criminalise terrorist financing and adopt measures that would allow it to block terrorist assets. In addition, Guyana should seize opportunities to sensitise the public to the harmful impact of money laundering on legitimate businesses and the national economy.
“The Government should become a party to the UN International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Corruption,” the US Drug Report added.