The Financial Intelligence Unit (FIU), a semi-autonomous agency whose formation was announced months ago to pursue the trail of suspected money laundering transactions, will be operational by the end of this month, an Office of the President (OP) official says.

It is widely believed that money laundering, any procedure to conceal the true origins and ownership of the proceeds of criminal activities so that they appear to have originated from a legitimate source, is going on and that this is closely linked to drug trafficking.

The unit will be located in the Ministry of Finance and not the Central Bank as was previously indicated and will commence operations with a staff of three - a director (to be recruited), a Central Bank official and a police officer. The position of director was recently advertised and Rajendra Rampersaud, head, Policy Unit, at the OP says it will be filled before the end of this month.

The FIU is the central national agency responsible for receiving (also requesting), analysing and disseminating to the competent authorities, information concerning the suspected proceeds of crime.

Rampersaud was in March given the responsibility to bring to a point of operation the Money Laundering Prevention Act (MLPA) passed since February 10, 2000. The Narcotic Drugs and Psychotropic Substances Act had been passed in 1988. Regulations to accompany the MLPA were crafted earlier this year. The Central Bank had earlier been given that responsibility to oversee the implementation of the Act but this was subsequently taken over by OP and earlier this year vested with Rampersaud.

Rampersaud indicates that the guidelines for the commercial banks to adopt so as to ensure suspicious transactions are reported were circulated among the banks and their positions are now with Cecil Durjon, the state’s legal draughtsman. A meeting is to be scheduled with the banks to discuss the changes to be included in the final guidelines.

Since the passage of the MLPA three years ago, the government has moved slowly in implementing the legislation. It only applied for membership of the Caribbean Financial Action Task Force (CFATF) to benefit from technical assistance last year as it had concerns about finding US$10,000 to pay in annual fees and had sought a waiver.

Implementing the MLPA has been a benchmark target with the International Monetary Fund and the World Bank, and that deadline has been shifting in the last few years.

But with the September 11 2001 terrorist attacks on the USA, the US government has begun to pressure countries to put in place systems to curb money-laundering activities. While Guyana was not highlighted as one of the countries seen as a major source of concern, the US offered to provide resources to help get the FIU off the ground.

“They had a special interest in seeing Guyana getting it [the implementation of its laws] right and have provided the hardware for the unit to get started,” Rampersaud says. The US is also willing to provide some training and there is US$196,000 available from the Inter-American Development Bank (IDB) under a technical assistance project to bolster the Central Bank’s supervision department for the implementation of the MLPA.

The US Department of Treasury has provided resources to review Guyana’s MLPA and some changes have been recommended. Additionally, regulations were crafted and the guidelines for the commercial banks were written.

And, as a result of Guyana being a member of the CFATF, a related agency, the Caribbean Anti-Money Laundering Programme will be providing training for staff of the FIU to develop its institutional capacity, Rampersaud says.

The FIU will be carrying out the functions of the Supervisory Authority, which as a body, comprises of representatives of the Attorney General’s office, the Ministry of Finance, the Director of Public Prosecutions and qualified police investigators.

The FIU will carry these functions over financial institutions under the Act and where it believes on reasonable grounds that a business transaction involves the proceeds of crime, it will have to send the report to the law-enforcement agencies.

The guidelines require financial institutions to put in place systems to determine the true identity of customers; recognize and report “suspicious transactions” to the FIU; keep records for six years; train relevant employees; liaise closely with the Supervisory Authority on matters concerning vigilance, policy and systems; and to ensure internal auditing and compliance officers regularly monitor the implementation and operation of systems. Institutions are asked not to enter into any business relationship with a person unless it has implemented these systems.

Financial institutions covered under the regulations include those covered by the Financial Institutions Act, as well as credit unions, trust businesses, safe custody services, building societies, immovable property businesses, money exchanges (cambios), money lending and pawning, money broking, money transmission services, venture risk capital and issuing and administering means of payments such as credit cards, travellers’ cheques and banker’s drafts. The trading for one’s own account or for the account of customers in money market instruments; foreign exchange; financial and commodity based derivative instruments and transferable or negotiable instruments are also covered.

Failure to adhere to the requirements in the guidelines carries legal repercussions and in the case of financial institutions, the revocation/suspension of one’s licence.

Suspicious transactions are defined in the draft guidelines as those inconsistent with a customer’s known legitimate business or activities, or with the normal business for that type of account. While the supervisory guidelines will cover new businesses, financial institutions are asked to be alert to the implications of the financial flows and transaction patterns of existing customers, particularly where there is a significant, unexpected and unexplained change in the behaviour of a customer in his use of an account or other financial services product. The guidelines, however, seem not to explore the size of any financial transaction of established businesses as it relates to their tax returns.

However, the identifiable points of vulnerability in this process are cross-border flows of cash; entry of cash into the financial system; transfers within and from the financial system; acquisition of investment and other assets; incorporation of companies or formations of trusts.

Under section 3 of the MLPA, conviction for money laundering carries a sentence of seven years and a maximum fine of $1M or both. Aiding, abetting, counselling, procuring or conspiring to commit the offence also carries the same punishment. Tipping off someone about an investigation or pending investigation in money laundering is punishable by three years in jail and/or a fine of $100,000.

Falsifying, concealing, destroying or otherwise disposing of or causing or permitting such actions on any material which is likely to be relevant to an investigation into money laundering or the execution of a freezing order, carries a penalty on conviction of five years in jail and/or a $100,000 fine.