By Joel Bhagwandin, Financial Analyst
AT his press conference yesterday (June 13, 2024), Vice President, Dr. Bharrat Jagdeo, unequivocally stated that the government will ensure that gold smugglers will face the full force of the law.
In particular, he placed heavy emphasis on the large players involved in gold smuggling—and—not so much the small miners. This is an important point of emphasis worth highlighting—so as to not drive fear among the small miners.
Notably, the small miners are the ones who sustain the economies of the mining regions in Guyana. For example, back in 2013/2014 when the Guyana Geology and Mines Commission (GGMC) clamped down on illegal mining in Region One, approximately 500 small miners were adversely affected, which eventually catapulted into a virtual collapse of that region’s economy, mainly the Port Kaituma, Matthews Ridge and Mabaruma sub-districts.
At that time, this author was attached to one of the local financial institutions operating in Port Kaituma and had advocated for the GGMC to grant the necessary permits to the small miners so that they can continue operating legally. The situation was further compounded when the gold price on the world market plummeted during the same period.
INTERNATIONAL ANTI-CORRUPTION CONVENTION AND KEY INSTITUTIONS
Guyana is a signatory to the United Nations Convention against Corruption, which was established pursuant to the General Assembly Resolution 58/4 of October 31, 2003. Member countries had up to December 2005 to accept, ratify, approve, and adopt the convention for implementation. In 2009, Guyana enacted the Anti-Money Laundering and Countering the Financing of Terrorism Act (2009) (AML/CFT).
Created by the G-7 countries in 1989, the Financial Action Task Force (FATF) is an international policy-making and standard setting body dedicated to combating money laundering and terrorist financing. FATF leads global action to tackle money laundering, terrorist, and proliferation financing. In so doing, FATF monitors countries to ensure that they implement the FATF standards fully and effectively.
The Caribbean Financial Action Task Force (CFATF) is an organization of twenty-four (24) States of the Caribbean Basin, Central and South America, which have agreed to implement common counter measures to address money laundering.
To this end, the main objective of CFATF is to achieve the effective implementation of, and compliance with, the FATF recommendations to prevent and control money laundering and to counter the financing of terrorism and proliferation of weapons.
OVERVIEW OF GUYANA’S AML/CFT SITUATION
Guyana has come a long way in terms of making progress in strengthening its domestic anti-corruption architecture in terms of legislation and enforcement. Over the years, however, the FATF and CFATF reviews have always flagged Guyana for the failure in the area of successful prosecution.
In 2014, Guyana was “grey listed” by FATF/CFATF for the failure to implement the recommendations pursuant to country reviews conducted at that time. The CFATF reported that: “As a result of not meeting the agreed timelines in its Action Plan, the CFATF recognizes Guyana as a jurisdiction with significant AML/CFT deficiencies, which has failed to make significant progress in addressing those deficiencies and the CFATF considers Guyana to be a risk to the international financial system. Members are therefore called upon to implement further counter measures to protect their financial systems from the ongoing money laundering and terrorist financing risks emanating from Guyana. Also, the CFATF has referred Guyana to the FATF. Countermeasures could entail, among others, 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 the country concerned, or otherwise taking into account the fact that the relevant financial institution is from a country that does not have adequate AML/CFT systems and limiting the business relationships or financial transactions with the identified country or persons in that country.”
The reason for that failure in 2014 was largely attributed to political deadlock at the time, whereby the Government was deemed a minority government, and the combined opposition had a one-seat majority in the National Assembly.
Fast forward to today, as was recently reported by the Hon. Attorney General that Guyana received favorable ratings from the reviews conducted by FATF/CFATF in 2023. This development represents marked improvement coming from the situation as previously described above in the 2011-2014 period.
On June 11, 2024, the U.S State Department of the Treasury issued a press release “targeting corruption network in Guyana”.
While the report was damning, it signals the efficacy of Guyana’s AML/CFT framework in respect of co-operation with other jurisdictions with regards to the conduct of these types of investigation, leading ultimately to prosecution. In this regard, the international convention on anti-corruption prescribes a regime of sanctions that can be invoked.
IMPLICATIONS
Deficiencies in the AML/CFT framework has dire consequences for the domestic financial sector and by extension the economy. These include severance of international correspondent banking relationships with the domestic banking sector, which would effectively cripple the international payment system and significantly hurt the financial sector. In fact, during the 2011-2014 period, a few local banks lost some of their international correspondent banking relationships.
Fortunately, the gravity of this effect was averted when the Amendments to the AML/CFT legislation were enacted. This risk remains, however, should Guyana regress to the 2011-2014 situation, one that the country cannot afford for the reasons stated above. Hence, the importance of continuously devoting serious efforts, actions, and resources towards strengthening the AML/CFT framework in order to protect the integrity of the domestic financial system.
