New money laundering bill being circulated for comment
-casino gambling, money transfer operations seen as challenges

Stabroek News
January 8, 2007

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A draft of a new money laundering bill is being circulated for comment to eventually replace the six-year-old one which is still to be fully activated and money transfer businesses and planned casino gambling would likely come under sharp scrutiny.

The new legislation will have control over how money transfer services operate in addition to tracking the activities of commercial banks and other institutions when it comes on stream. It had been promised for passage in the National Assembly as one of the first items of business for 2007.

The new legislation, which seeks to replace the Money Laundering Prevention Act of 2000, is patterned after the proposals of the Financial Action Task Force (FATF), an inter-governmental body whose purpose is the development and promotion of national and international policies to combat money laundering and terrorist financing.

A draft of the new bill is presently being circulated to the Bank of Guyana and the commercial banks for their comments.

The FATF's 40 recommendations on money laundering and additional nine recommendations on terrorism financing were the guiding principles in the crafting of the new legislation. And as part of its mandate, the new legislation would seek to have greater control over money transfer operations as it integrates the additional nine recommendations against terrorist financing. The law will mandate money transfer companies to get originator information or information on the source of the funds and the background on the sender.

Many proponents of the new legislation say that the bill is needed now more than ever since gambling legislation is also being tabled. They said that legalised gambling is an open invitation to money laundering activities. Casino gambling legislation takes to the National Assembly on January 11, 2007.

The bringing of this new legislation into effect will be the force giving 'teeth' to the FIU that had been set up to monitor and apprehend those businesses and individuals involved in filtering proceeds of crime into the economy. Since late 2003, the FIU was set up but even though the unit has been pursuing some reports of money laundering and financial irregularities, there has not been a single prosecution as a result of the investigative work. Paul Geer, FIU director has indicated that he does not want to speak to the media on the work that the FIU is engaged in. There has not been a public statement by the authorities since 2003 on the work that the FIU has done.

Recommendation 26 of the FATF stated that countries should establish a FIU that serves as a national centre for the receiving - and, as permitted, requesting - analysis and dissemination of suspicious transaction reports (STR) and other information regarding potential money laundering or terrorist financing.

"The FIU should have access, directly or indirectly, on a timely basis to the financial, administrative and law enforcement information that it requires to properly undertake its functions, including the analysis of STR," the recommendation said. "If a financial institution suspects or has reasonable grounds to suspect that funds are the proceeds of a criminal activity, or are related to terrorist financing, it should be required, directly by law or regulation, to report promptly its suspicions to the financial intelligence unit (FIU)."

The recommendations said that other financial institutions should be licensed or registered and appropriately regulated, "and subject to supervision or oversight for anti-money laundering purposes, having regard to the risk of money laundering or terrorist financing in that sector." The FATF said that at a minimum, businesses providing a service of money or value transfer, or of money or currency changing should be licensed or registered, "and subject to effective systems for monitoring and ensuring compliance with national requirements to combat money laundering and terrorist financing."

Minister of Legal Affairs, Attorney General Doodnauth Singh said that based on the comments received from the various stakeholders, the bill could be reshaped from its present draft form.

The reporting agencies in the fight against money laundering will be the Bank of Guyana, the Office of the Commissioner of Insurance, the Guyana Revenue Authority and others. These agencies would have to sound the alarm in the event that suspicious activity is detected.

The 2006 International Narcotic Control Strategy Report from the US State Department stated in March last year that Guyana "is neither an important regional financial [centre] nor an offshore financial [centre], nor does it have any notable offshore business sector or free trade zones."

That report stated that the scale of money laundering is thought to be large relative to the size of the economy, "with some experts estimating that the informal economy is forty to sixty percent of the size of the formal sector."

Money laundering, the report said, has been linked to trafficking in drugs, firearms and persons, as well as corruption and fraud and noted that drug trafficking and money laundering appear to be propping up the Guyanese economy. (Johann Earle)