EXITING the Financial Action Task Force’s (FATF’s) International Cooperation Review Group (ICRG) process could take between four and seven years, according to Attorney General and Minister of Legal Affairs, Anil Nandlall.
The Caribbean Financial Action Task Force (CFATF), on May 28, pronounced on Guyana’s failure to address deficiencies in its Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework. Through a missive to its members, counter-measures against Guyana were advised, effectively blacklisting the country on the international scene.
FATF’s next plenary meeting is slated for June 23 to 25, 2014 in Paris, France, at which time the international body is likely to put Guyana up for review by ICRG.
Nandlall told the Guyana Chronicle, in an invited comment, that passing the AML/CFT (Amendment) Bill, which has been “held hostage” by the combined Opposition, who are demanding that certain conditions be met before the Bill can be passed in the National Assembly, will not automatically extricate Guyana from the “conundrum” in which it has been placed.
“Even if the bill is passed tomorrow, they can still subject us to an ICRG review, which is a comprehensive review, everything that the CFATF has done already will have to be redone and Guyana will have to go to several countries…to subject the country and its systems to all manner of scrutiny and examination”- AG Nandlall
“I believe that each case is judged on its own, having regard to its own peculiar regime of delinquency and the willingness of the defaulting state to correct the deficiency,” he said.
The AG added that the time a country takes to “graduate” out of FATF’s ICRG process is dependent on the nature and magnitude of the deficiencies, as well as the speed at which those deficiencies can be rectified.
“Once you come under FATF supervision it is a process and it takes time to graduate out of that process. Generally the empirical data of countries that have been subject to this process take from four to seven or more years as the case may be,” he said.
Nandlall pointed out too that the review itself is a “comprehensive process” that will include the review that was already done by CFATF.
He said: “Recommendations will be made all over again. We will have to pass laws and implement administrative policies and set up recommended mechanisms and institutions that are so recommended.
“…I don’t think that Guyana is so special that anyone will have an accelerated exit or they are going to provide Guyana with some expedient way of extricating itself. We will have to go through the normal process.
“Even if the bill is passed tomorrow, they can still subject us to an ICRG review, which is a comprehensive review, everything that the CFATF has done already will have to be redone and Guyana will have to go to several countries…to subject the country and its systems to all manner of scrutiny and examination.”
The AG stressed that the process is a very costly one. “The bottom line is it will cost us a huge sum of money, it will cost us a tremendous amount of time,” he said.
In the meantime, he pointed out that the passage of the AML/CFT (Amendment) Bill is the best that Guyana can do at this time.
“The best we can do is pass the law; it creates a platform for us to exit as early as is reasonably possible,” he said.
The enactment of the AML/CFT (Amendment) Bill before CFATF’s meeting last week, by all accounts, could have averted Guyana’s referral to CFATF, particularly since the body noted that 90 per cent of the deficiencies identified are legislative in nature.
The Bill, to meet CFATF’s requirements, was tabled in the National Assembly in April 2013, but referred to a Parliamentary Special Select Committee and was eventually voted down by the joint Opposition in November 2013. The bill was re-tabled December 2013 and again referred to the Parliamentary Special Select Committee, where it has been since.
Until then, however, the AG said Guyana has already been advised, unofficially, that a team will have to be assembled to work along with FATF.
“Because of the technical and specialised nature of the work required to be done in this exercise and because of the timeframe that will have to be met, the recommendation is that a team of suitably qualified personnel be specially pointed to specifically deal with this situation,” he said.
According to him, going forward Guyana will have to expend millions during FATF’s review.
The AG said: “It will be a costly exercise because I know visits will have to be made to and from Guyana to various parts of the world, wherever the review body is located, and of course the attendant costs that will be associated with the implementation of the recommendations that will be made.
“Those costs have to be coupled with the haemorrhaging of the economy that will take place as a result of the blacklisting.”
Relative to the latter, Nandlall referenced the several counter-measures that were outlined by CFATF. These include the requirement of enhanced due diligence measures; introducing enhanced reporting mechanisms or systematic reporting of financial transactions; refusing the establishment of subsidiaries or branches or representative offices in Guyana; and taking into account the fact that financial institutions from Guyana that do not have adequate AML/CFT systems and limit the business relationships or financial transactions with the country.
“During all this time Guyana will remain blacklisted and all the negatives that will flow therefrom, which will include lack of investment, reduction of volume of business in the country, instability of the valise of the Guyanese dollar, inability to access financing from important international partners, for example the international financial intuitions, as well as a host of other unpredictable and unknown consequences.”
The AG bemoaned the fact there is “nothing conceivably good” that can come out of this process Guyana is already subjected to. “We are there already,” he said.
CONSEQUENCES BEING FELT
Additionally, in November, Guyana was blacklisted regionally by CFATF and Chairman of the Private Sector, Ramesh Persaud, in a prior interview stated that there is already evidence of a decline in investments in the private sector.
He said, “Loans and advances to the private sector by the commercial banks is one of the reliable indicators of private sector growth and investments. This was $40.8B in 2004 and rose to $128.2B at the end of December, 2013.
“At the end of the first quarter of 2014, the balance dropped to $127.5B and has been stagnant for the last three months.
“This is a sign that there has been a decline in the investments made by the private sector. This is linked to a lack of confidence and a high level of skepticism by private enterprises in the economy due to the uncertainties brought about by the possibility of sanctions.”
According to him, the classification of Guyana by CFATF and the referral of Guyana to FATF lumps both legitimate and illegitimate businesses of Guyana into the same high risk category.
Persaud said, “Legitimate law abiding businesses are going to feel the consequences even more as money launderers and financiers of terrorism will continue to find sophisticated methods of by-passing the system as they are good at scheming and plotting and they would not mind the extra cost associated with doing so.
“However, legitimate businesses have no alternative, but to comply with the onerous systems and bear the extra cost. For this, the consumer will eventually suffer as business models are built to pass on and recover costs fully.
“…Guyana is already ranked poorly in many international indices such as the World Bank Doing Business Report and the World Economic Forum Global Competitiveness Report and the referral to FATF only worsens this situation.”
Stakeholders from the private sector, the diplomatic corps and regional, as well as international, partners are calling for Guyana’s leaders to act with haste in the interest of the nation.
(By Vanessa Narine)