The Government is about to repeal the Money Laundering Prevention Act
even before it became fully operable. That act first saw the light of day
when it came in a bill form on October 10, 1998 as one of theraft of
business-related legislation introduced at the behest of the International
Perhaps as a sign of things to come it took some fourteen months before
the bill was finally passed on February 10, 2000, assented to one month
later and became law on publication in the Official Gazette on March 29 of
the same year.
In the more than six years in which the act was in force, not once did
the Minister of Finance make any regulations or amend any of the schedules
to the act which would have given him the flexibility and the authority to
respond to changing circumstances and make the act truly effective. Now we
are told that the act with its 29 sections which have never been properly
put to work is now to be replaced by an act which is exactly four times as
long, which seeks to bring into law matters dealing with the financing of
terrorism, and assigns as the principal supervisory authority for the
prevention of money-laundering the Financial Intel-ligence Unit (FIU) to be
set up within the Ministry of Finance.
If the optimists have reasons to believe that the new law would be more
successful than its predecessor, then the realists would be four times as
justified that we are about to embark on another expensive and cosmetic
exercise with a low prospect of success. Having failed to manage an act
whose modest and sole objective was the "prevention of money laundering," we
now replace it with a law whose ambitious purposes are "the establishment
and management of a Financial Intelligence Unit; to provide for unlawful
proceeds of all serious offences to be identified, traced, frozen, seized,
and eventually forfeited; to provide for comprehensive powers for the
prosecution of money laundering, terrorist financing and other financial
crimes; and the forfeiture of the proceeds of crime and terrorist property;
to require reporting entities to take preventive measures to help combat
money laundering and terrorist financing; to provide for civil forfeiture of
assests and to provide for matters connected therewith."
One can already see the new breed of lawyers wringing their hands in glee
at the prospect of defending those whose activities combine to destabilise
the economy, and cover their track of illegal activities ranging from narco-trading,
fuel smuggling, tax evasion and currency transfers. In fact one recent
ruling in Japan where the court decided against a prosecution, has led to
certain sections of the press in that country claiming that Japan will now
become a money-laundering tax haven.
Public interest v individual rights:
By its nature, legislation dealing with offences of the kind referred to
above places the interest of society as a whole (the public interest) on a
potential collision course with the interests of individuals. In fact
section 3 of the draft bill which deals with the offence of money
laundering, provides for a person to be guilty of money laundering if the
person knowing or having reasonable grounds to believe that property in
whole or in part directly or indirectly represent any person's proceeds of
crime a) converts or transfers property knowing or having reason to believe
that such property is the proceeds of crime; b) conceals or disguises the
true nature, origin, location, etc, of that property; c) acquires, possesses
or uses that property; or acts as an accessory to commit, attempts to commit
and aids and abets, counsels or procures and facilitates any of a) to c).
Under the law it is not necessary for it to be proved which serious
offence has been committed or for a person to be convicted of a serious
offence to prove that property is the proceeds of crime and that knowledge,
intent or purpose may be inferred from the facts.
The fines on conviction range from one million dollars to one hundred
million dollars or to imprisonment of up to seven years. For a company the
fine ranges from $200 million to $500 million. The law may not always seem
logical and appears to advise that if you plan on money-laundering, do it as
The scope of the draft bill is quite wide and designates as reporting
entities persons and professions set out in the law and includes financial
institutions, cambios, pawnbrokers, real estate, casinos, credit unions,
safe-custody services, used car dealers, directors and secretaries of
companies, partners in a partnership, lawyers, notaries and accountants when
they prepare for, engage in or carry out certain specified activities.
Types of offences:
The law focuses on three types of offence - serious offence, money
laundering and terrorist acts - all of which are defined in the draft which
makes a distinction between the supervisory authority and any regulatory or
competent authority. It includes among the supervisory authorities the Bank
of Guyana, the Commissioner General and the Commissioner of In-surance which
are generally referred to in popular usage as 'regulators.'
One of the major weaknesses in the proposed law is the location of the
Financial Intelligence Unit in the Ministry of Finance under a director to
be appointed by the President, not only endowed with certain immunities but
with quite considerable powers.
The Bank of Guyana, however, seems to be a more appropriate institution
under which to include the unit given the bank's existing roles of a
regulator of financial institutions.
The draft law gives the director exclusive control of the funds and
resources made available to the unit. It seems that this position has
already been filled without any advertisement, which is hardly the way to
inspire confidence and public support. The staff which shall include an
accountant and an attorney-at-law are to be appointed by the Minister of
Finance and other personnel although it is unclear who appoints these
persons. This seems to make these persons public servants subject to public
service rules and salaries and therefore easy prey for corruption.
The law as drafted will allow the FIU to enter into agreements with
foreign governments for the exchange of information in relation to
investigations into money laundering and terrorist financing offences.
The supervisory authority is given wide powers including the issue of
warnings, the imposition of fines and prohibiting convicted persons from
obtaining employment in the sector. The Securities Council must be smiling
to know that it will not be the only public body that lawyers might seek to
cripple in the execution of their statutory functions. It would be useful if
the Guyana Bar Association would offer its comments on the draft law rather
than do nothing and see the law challenged in its operation later on.
The law will allow a police officer with a proper warrant, to enter upon
land or premises, (what about aircraft, vessels?) and to seize documents
found in the course of the search and believed to be relevant in relation to
serious offence, money laundering or terrorist financing.
This section will also apply where a foreign state requests the Guyana
authority for assistance to locate or seize tainted property. To facilitate
cooperation between states the law will make money laundering and terrorist
financing offences to which laws relating to extradition or the rendition of
fugitive offenders will apply.
Those interested in the constitutional provisions regarding receipts of
moneys by the state will find the law's proposal for a Confiscated and
Forfeited Assets Fund and the purposes for which the moneys might be used
quite interesting and possibly in contravention of the constitution. Less
controversially the law also allows for the freezing of assets on an
application by the Director of Public Prosecutions who is also the authority
for an order for forfeiture.
From all appearances the law is a generic international law no doubt
suitable for societies with a general respect for the rule of law, a strong
court system which is capable of balancing the rights of the individual with
the public interest, an effective office of Director of Public Prosecu-tions,
a courageous revenue authority and law enforcement agencies which enjoy the
public confidence and trust.
These are in short supply in Guyana and no matter how desperately we need
this kind of legislation, it is hard to see it being successful in the short
to medium term.
The draft clearly needs a lot of work, not only cosmetic but substantial,
to ensure that it will not end up like the one it is designed to replace.
There is no indication whether and if it will be put out for public
discussion or the proposed timetable for its tabling in the National
Assembly made available. Meanwhile laundry services of the financial types
will have a field day, establishing their laundries and setting up an
unfathomable network that no untrained, under-resourced and scared body will
be able to penetrate.