Anti-money laundering and countering the financing of terroism (Amendment) Bill 2013 – Bill no. 22/2013
4072 19 Dec, 2013
Mr. Nandlall: Thank you very much Sir. Sir, you correctly described this Bill as now a famous Bill. I do not believe that there have been many Bills, which passed through this Assembly in recent times that would have received the acclaimed and public commentary that this bill has inspired and precipitated.
It is widely known that this Bill has international implications for Guyana. It is widely know that we are required under recommendations promulgated to us by the Caribbean Financial Action Task Force (CFATF) to implement those recommendations within a given timeframe. Thus far we have defaulted badly in our compliance with those regulatory prescriptions. As a result, an adverse public statement has been issued against Guyana in November, calling upon member states that fall under the jurisdiction of the Caribbean Financial Action Task Force to take such measures that are necessary to protect themselves from the risks that Guyana poses as a money laundering and terrorism state.
The repercussions that are flowing from this statement are still being assessed. I stated sometime ago, about three weeks ago, that it will take about a month before they begin to sink in. Unfortunately, I am aware that they have begun to take effect. The Minister of Finance would be better positioned to explain the effect it has had so far on the economy.
I know for a fact that there has been a drastic diminution of remittances. I know for a fact that there is a tremendous paucity of foreign currency at the banks – at the local commercial banks. I know also of several commercial institutions located outside of Guyana, who have had relationships with commercial entities in Guyana. Those relationships have undergone tremendous changes. I know for a fact that the Central Bank of Trinidad and Tobago has issued an advisory and so has many banks – central banks in the Caribbean, advising their respective commercial sector of Guyana’s unfortunate position and advising the constituent members to protect themselves against whatever risks emanate from Guyana.
I do not think that anyone can seriously gainsay the importance of this Bill and the importance of it being passed in a timely manner. The Bill is quite a unique piece of legislation, unique in the sense that it deals with an area of activity that is recent, comparatively, with other forms of criminal conduct. It carries with it its own peculiarities and obviously the law, in relations to these activities. I speak of money laundering and the financing of terrorism.
The rules and laws developed to deal with these new phenomenon that have emerged over the last 20 years in the global arena have indeed been different, they have been peculiar and some may describe them, when I read them for the first time I so describe them, as drastic. Some may be described as – drastic is one word – the other word that I used when the Bill was before the Select Committee, the substantive Act; when it was a Bill before that committee, I cannot remember that word now... drastic and draconian. Because when one examines what it seeks to do, in terms of regulating human conduct; when one examines the onerousness of the responsibilities which it imposes; when one examines the types of offences which it creates; when one examines the magnitude of the penalty which flows from the breach or violation of these provisions, one gets the distinct impression that they are dealing with a different pedigree of legislation.
9.15 p.m.
That is what characterises any modern money laundering legislation. In 2009, we passed the Principle Act. At that time we were complying with recommendations dispensed to us by regulatory bodies and the legislation which we promulgated then, which is the Principle Act now, was a model created by a number of international agencies and these models were implemented by jurisdictions all over the world – the CARICOM Region, the Organisation of American States (OAS), Latin America, Europe, North America and elsewhere – in fact it was an obligation and it still is an obligation which flows directly from United Nations treaties and other arrangements so countries did not have a choice, but to implement the legislation.
The legislation comes in a particular way. It has a government structure and it is described as a financial intelligence unit. The language may vary slightly, only in form from jurisdiction to jurisdiction but the structure is the same and that financial intelligence unit is that body that regulates the legislation and ensures that the legislations are complied with and the obligations which it creates are discharged. There are different models which have been used for the creation of that type of financial unit. In fact, the World Bank produced a manual detailing three types of units that have been used in the world and we in Guyana chose, in 2009, the model which is the model used in North America and Caribbean. That is the general structure and of course we have the bill. These amendments are very copious in nature. They are very technical in nature also. All of them have their genesis in recommendations which have been made to us by the Financial Task Force.
The Financial Action Task Force visited Guyana. They examined our financial architecture. They met with the relevant officers of Government. They met with the relevant players in the financial sphere – the Central Bank, the Director of Public Prosecutions, the Police Force, the Guyana Revenue Authority. They met with a number of private sector organisations, etcetera. They compiled a report and a series of recommendations specific to Guyana and they mandated Guyana to implement those recommendations. The recommendations can be categories into two broad categories, one being that which can be described as administrative recommendations being measures which are to be taken at a Governmental level or via the various organisations falling under purview of the Government and the other component of the recommendations is to be implemented by way of legislation.
The assessor of Guyana assigned by the Caribbean Financial Action Task Force in their assessment of the recommendations have said that 98% - that is their own percentage used – of the recommendations which are to be implemented by Guyana are of a legislative nature and it is that 98% of the regulations which has been captured in the Bill that is before the House. I do not know whether I would want to go through all of them, but I can highlight a couple important ones and locate the recommendations specific to which they relate so that if any Member of the Opposition, or anyone for that matter, would want to question the genesis, the basis, the rationale or the existence of any particular amendment in my presentation I will attempt to link each of the proposed amendments to a particular recommendation.
Clause 4 of the Bill amends Section 9 of the Principle Act and this amendment seeks to satisfy FATF Recommendation 25 which deals with guidelines and feedbacks. The recommendation requires the Financial Intelligence Unit (FIU) to provide financial institutions and designated nonfinancial business or professions that are required to report suspicious transactions with adequate and appropriate feedback. I pause here to say, Sir, that the legislation, the Principle Act and now this Bill has created a network of organisations all under the administration of the FIU and each organisation thus created is intended to record transactions that they are conducting and to pass the recordings of those transactions to a central place where the relevant information would be extracted and this is how the legislation is structured so that one has at some central place a reservoir of appropriate information where an informed decision can be made in relation to money laundering and the financing of terrorism with the hope at the end to institute charges and to prosecute successfully offences where it is believed there is cogent and compelling evidence to do so.
Clause 5 of the Amendment Bill amends Section 11 of the Act. This amendment, again, satisfies Recommendation 14 which deals with protection for the reporting of suspicious transactions. Many a time persons are afraid that should they report any suspicious activities they may be exposed to violence and to their safety being jeopardised. This clause here seeks to confer some type of protection and it also protects the person giving the information in the sense that if the information is made in good faith then the person is not liable, criminally or otherwise, for that information supplied.
Clause 6 of the Amendment Bill amends Section 16 of the Principle Act and this amendment seeks to satisfy FATF Recommendation 5 which requires reporting entities to obtain information, ownership of customers who are legal persons or legal arrangements in order to determine who the natural persons that ultimately own or control the customer are. It expands the due diligence obligation of reporting entities, as such definition of beneficial ownership is put out there with regard to legal entities, etcetera. Sir, you know that there are many legal mechanisms - as a lawyer you would be well aware of it - whereby a person can hide their true identity by utilising several devises which are available both in equity and in law in order to camouflage, disguise or to conceal who may be the true owner and have a person fronting for that concealed person; the Bill addresses that in a very detailed way and has provisions to ensure that at least that type of arrangement is minimal.
Clause 7 of the Bill amends Section 16 of the Principle Act and this satisfies Recommendation 5 by requiring reporting entities to conduct enhanced due diligence measures for high-risk category of customers or where the Financial Intelligence Unit is aware that another country does not apply or insufficiently applies recommendations of the Financial Action Task Force. It is this very section; it is a reciprocal arrangement. The same way that Guyana is now exposed to measures which can be taken against Guyana because Guyana has not satisfied FATF recommendations. Our Financial Intelligence Unit has reciprocal power and can reciprocate such treatment to another defaulting country.
Clause 8 of the Bill amends Section 18 of the Principle Act. This seeks to satisfy Recommendations 11, 13 and 21 to ensure that reporting entities also make records available to the competent authorities and duly authorised auditors. It expands reporting entities obligations to possible terrorist financing offenses to include activities involving funds suspected of being linked or related to or being used in terrorism, a terrorist act or by a terrorist organisation. There are a series of other similar amendments linked to different recommendations and I do not think that it is necessary for me to detain the House by going through each one except to say that all of these recommendations, when they were crafted in the form of this Bill that is before the House each one of them was sent individually to the Caribbean Action Task Force and they were each approved as satisfying the particular recommendation to which they were attached and that is a fundamental point that I want to make. Later on I will expand on that.
Of course, expectedly, to bring all of these organisations under the umbrella of this Bill and under the umbrella of the Financial Intelligence Unit it was obviously necessary to amend a series of legislation and this bill, by Clause 18, amends the following legislation: The Gambling Prevention Act, the Companies Act, the Insurance Act, the Mutual Assistance in Criminal Matters Act, the Security Industry Act, the Money Transfer Agency Licensing Act, the foreign Exchange Miscellaneous Provisions Act and the Cooperative Societies Act. All these acts have been amended as were required by the Caribbean Action Task Force recommendation. Importantly, Sir, we had a lot of discussions when we were in the Select Committee and even at the drafting stage of the Bill with the Caribbean Action Task Force concerning confiscation, forfeiture and freezing of assets.
As I said earlier in my presentation, this Bill has some provisions that may be considered in the ordinary course of criminal legislation to be Draconian and when one goes through the powers that are granted to seize property and to detain property and to seize property one gets the clear impression of the Draconian nature of these powers but that is the model legislation and that is nature of the beast. Careful attention had to have been paid to the question of constitutionality because whenever you interfere with a person's property one has to take into account the protection which the supreme law of the land accords to private property against interference by the state so Article 142, as a fundamental right, had to have been examined in great detail an each of these provisions which touch and concern property were examined and scrutinised against Article 142 to ensure that they do not infringe or collide with Article 142 because, of course, it would have been unconstitutional. I must emphasise that convincing the personnel at the Financial Caribbean Task Force of our requirement to ensure that we meet the litmus test of constitutionality was not an easy task so long and protracted discussions had to have been held before they were convinced that certain changes had to have been made to recommendations which they made to bring the bill to constitutional conformity; at least our opinion of constitutional conformity.
Many of the recommendations which came concentrated power in the Executive, including the subject Minister, who is yours truly, and the Minister of Finance and the great circumspection. First of all concerns were raised by both Ministers about the plenitude of unnecessary power which the recommendations seek to reside in the Ministers and every attempt was made to divest these powers away from the Minister. For example, the Attorney General, under the recommendation and in the original formulation which was given to us had the power to freeze a person's account, all the monies in the account, and then go to the court for an order and I argued that that is:
1. An unnecessary power
2. A power that can lead to violation of constitutional rights
I, personally, as the current incumbent office holder would not want to exercise such a power over any person's property and we shifted that power to the court because we feel that if there is any person who should be resided with such a magnitude and plenitude of power it should be the judiciary and whoever wants an order to freeze any person's assets they must go to the judiciary first, get the order, and then the person who is affected by the order can subsequently go there and get the order discharged. There was a deliberate attempt to insulate, away from the Executive, powers which were being trusted upon the Executive via the recommendations of the Caribbean Action Task Force.
Also the Bill details the various amendments to the various legislations and all of these amendments are designed to achieve one thing; to ensure, for example, that those institutions or organisations which fall under the Gambling Act are brought under the administration of this bill. All of the Credit Co-op Societies, for example, that fall under the Co-op Societies Act are brought under this. All of the organisations which fall under the Cambio Exchange Act are brought under the Money Laundering Act. All organisations which fall under the Companies Act and the Friendly Societies Act were brought under the organisation of Money Laundering Act. The whole intention is to create a massive network and a massive umbrella under which there can be some form of regulation of the activities of these bodies so as to minimise the possibility of money laundering and associated activities.
I also dealt earlier with the head of the FIU and I indicated that the structure used to create that body was in sync with structures used in the Caribbean. The model that we use is described by the World Bank as the Administrative Model and that is the model that has been used in the Bahamas, in Belize, in Grenada, in the Kaman Islands, in Antigua and Barbuda, in Canada, the United States of America, Australia, Trinidad and Tobago, Barbados and the United Kingdom. I say that and I list those countries simply because I heard in the press Members of this House speaking about this matter, expressing concerns, dissatisfaction, discord with the current construct of the FIU and I would like to assure this House that there is nothing deficient, there is nothing peculiar about the FIU, the way it is constructed in Guyana because it is the model that is being used. It is the model that has been recommended by the World Bank and used widely in the Caribbean and in North American and I have just enumerated a number of jurisdictions which have employed the same model.
The other important point that I want to make is the question of timing. If I may read the statement which was issue against Guyana on 20th November, 2013, it reads as follows:
"In November, 2011, the CFATF brought to the attention of its members certain jurisdictions, including Guyana, with significant strategic deficiencies in their AMLCFT regime. With a view to encouraging expeditious rectification of the identified strategic deficiencies Guyana and the CFATF developed an action plan with identified target dates to address the strategic deficiencies that exist in Guyana's national architecture to combat money laundering and the financing of terrorism. As a result of not meeting the agreed time lines in its action plan the CFATF issued a public statement in May, 2013, recommending that Guyana take steps to ensure it addressed its AMLCFT deficiencies. Guyana has made efforts to address its deficiencies, however, it has not taken sufficient steps towards improving its AMLCFT compliance regime by failing to approve and implement required legislative reforms. Guyana must therefore pass the relevant legislation and implement all of the outstanding issues within its action plan..."
Then they detailed specifically what we are to do. Then it concludes:
"Members are therefore called upon to consider implementing counter measures to protect their financial system from the ongoing money laundering and terrorist financing risks emanating from Guyana."
Sir, an examination of this statement would to the inescapable conclusion that the process is time bound. We are already late.
I know that there is a view or there is a feeling or an intension to take this bill to a Select Committee. My preference and the Government's preference is not to go in that direction but having regard to the fact that the bill ought to be passed as a matter of national imperative we are prepared to flex in that direction, but there are two matters of paramount importance which must be emphasised:
1. If we move in that direction then we have to ensure that the work of the Committee is proceeded with expeditiously and with every convenient speed. I cannot overemphasise that this is a time-bound process.
2. If there are any alterations, additions, amendments to be made I ask, respectfully, that we be cognisant of that fact that this bill has already been approved by the Caribbean Financial Action Task Force as satisfying the requirements now, currently. Any interference with the provisions of the Bill in its current state will require going back to the Caribbean Financial Action Task Force for their further approval. That is a time-consuming exercise. Secondly, any alterations to what they have already approved may remove that which has been approved outside of that which has been approved. In other words, whatever has been approved, if it is interfered with in an undue way, can defeat all that has been accomplished.
Sir, I do not think that I need to make the case further of the importance of this Bill also the importance of its passage through this National Assembly be done with every convenient speed. Sir, thank you very much. With those few remarks...
Mr. Nandlall (replying): Thank you very much, Sir. We have heard a lot of arguments advanced. I would like to thank the Members on the Government side who would have so ably contributed to this debate. I would also like to thank the Members of the Opposition for the perspective which they have put. We heard from the Hon. Member, Mr. Ramjattan, that the position of the Alliance For Change, unfortunately, is that this Bill cannot, according to him, be looked at by itself. This Bill, according to him, must be linked to the establishment of a Public Procurement Commission – a proposition we reject because this Bill obviously has its own implications. It deals with different issues.
The Public Procurement Commission - we spoke at length about that - is important and it has its own metamorphosis that it must go through. The Government has stated its position already; pass the amendment to the Procurement Bill and we get the Procurement Commission established in two months. That is the position in relation to that. But in relation to the Anti-Money Laundering and Countering the Financing of Terrorism Bill, that is different. The Public Procurement Commission and the Public Procurement (Amendment) Bill are connected. This Bill here is completely different so the Alliance For Change’s position obviously is one that is untenable. They have disregarded, as the Minister of Finance articulated, the concerns of the citizenry, the stakeholders, the Bankers Association, et cetera.
APNU’s position is that they would like some amendments to be made. We have not seen the amendments and while the Bill resided in the Special Select Committee for several months, not a singular line, not a singular sentence that purports to be the beginning or the end of an amendment, was put forward. But in the spirit of compromise and because...
Sir, I get the distinct impression that the Opposition collectively feels that if this Bill is defeated, somehow or the other, the Government or the Minister of Legal Affairs will be somehow injured. The Minister of Legal Affairs’ life would be unaffected. The country would be blacklisted and, as a Government, we have a responsibility and we owe the people of this country a duty and we take that duty seriously. It is because of the importance of this Bill to the welfare of the people and the country we are taking the approach we are taking. We can jump on our own high horse and ride off into the darkness and say to hell with this Bill, as the Opposition is saying. I do not have to be here cajoling people to come to Special Select Committee and put forward amendments; that is not my job. I do not babysit big people. But all of that being said, Sir, we will commit the Bill once again. It has been there; it stood there idle; and it came out back without any input from the Opposition, not because of a lack of an opportunity, but because of a lack of initiative. We are taking it again, Sir, and this time I ask that...
Mr. Speaker: I am sorry. There is a Point of Order.
Mr. Greenidge: Did the Minister say that the Bill came without any input from the...
Mr. Speaker: I did not hear. I am sorry.
Mr. Nandlall: Mr. Greenidge is hearing things. Sir, I ask that one caveat be added. As the Hon. Member, Ms. Teixeira, indicated there is a Financial Action Task Force (FATF) meeting scheduled for mid-February and that body can, on its own volition, select Guyana for review. They do not have to wait until the Caribbean Financial Task Force (CFATF) meeting. To prevent Guyana from being exposed to that possibility, I believe whatever amendments are to be made can be made, Sir, within one month. Also, Sir, since there seems to be, on that side at least, lack of recollection as to what transpired in the Committee, I want to ask that the Committee’s hearing be held open for the public and for the press to attend so that the press can see who are making amendments and who are responsible for dilly-dallying, dilating and delaying so that no one will be in doubt or no one will have to call anyone’s minute taker and try to insult people as minute takers. We will have verbatim recordings taped and whatever proposals are put will be published in the press. We will see how many proposals will come; we will see the nature of the proposals; and, hopefully, the process will be one that is timeborne.
I am asking for a couple of things. I am asking that this House considers sending the Bill to the Special Select Committee with two conditionalities: one, that it be returned to the House on or before 31st January, 2014 and, secondly, that the proceedings in the Committee be public proceedings to which the press be invited. We want a report from the Committee by 31st January, 2014 and that the proceedings in the Committee be public and open to the press. That is the proposal, Sir, from the Government. I would ask, Sir, through you, if the Opposition would want to respond or we go to the...
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