Money launderers threaten stability of region
-US$50B 'cleaned' in 1999
Stabroek News
May 28, 2004
Money laundering is posing a grave threat to the long term stability of Caribbean economies as the region becomes increasingly attractive to individuals seeking to disguise their illicit income.
In 1999, approximately US$600B in illicit funds was laundered through the world's financial systems with an estimated US$50B being laundered through Caribbean institutions.
This was one of the disturbing revelations at a seminar sponsored by the Bank of Guyana. Among the attendees were officials of The Carib-bean Anti-Money Laundering Programme (CALP) who sensitized local financial institutions and law enforcement officials about the challenges they face.
CALP began in 1999 and provides technical assistance and training to 21 countries in the Caribbean to combat money laundering.
Nyron L. Davidson, a CALP financial sector technical adviser, told Stabroek Business that money launderers are attracted to the Caribbean because they can take advantage of the region's legal framework and the lack of technical resources and expertise at the banks.
Money is laundered through the Caribbean from Canada, Colombia, Africa, Europe and from Caribbean nations themselves, said Davidson. He noted that the sources of the money are not only related to illegal drugs but also from white-collar crimes.
Davidson called for more public awareness campaigns in Guyana.
Guyana has enacted the Money Laundering Preven-tion Act of 2000 (MLPA) and is a member of the Caribbean Financial Action Task Force (CFATF).
In his presentation at the seminar, Davidson outlined several areas which the financial institutions need to focus on.
Some of the common compliance deficiencies, according to Davidson, are financial institutions' failure to adequately evaluate new accounts.
If a customer comes to the bank to deposit large sums of cash, they must be able to say where the money comes from as well as provide proper identification and other details which can be verified. But if the customer cannot adequately account for the cash, or the address given on the documents is invalid, then this is cause to suspect money laundering.
This suspicion is then reported to the Financial Intelligence Unit (FIU) which will evaluate all suspicious/ unusual transactions and file a Suspicious Activity Report.
The FIU co-ordinates with the bank's audit, legal and security departments, then investigates and prepares reports for senior management, board of directors and for the regulatory authorities.
Last month officials from CALP were in Guyana to conduct on site training for the support staff of the FIU which is located at the Finance Ministry. To date a director is yet to be identified for the unit, however, Stabroek Business was told that the US government is willing to supplement the salary for that position.
It is in the interests of the bank to deter money launderers as they risk legal implications and negative publicity, said Davidson.
They can also face the revocation of their banking licence, penalties and in-creased regulatory oversight.
Davidson added that overseas investors are likely to shy away from countries which are implicated in money laundering.
A recent US State Department report stated that the scale of money laundering in Guyana is thought to be large and is linked to trafficking in drugs, firearms and persons, even though Guyana is neither an important regional financial centre nor an offshore financial centre.