More anti-money laundering action coming, says FinMin
Jamaica is unlikely to be taken off several international lists that have tagged the country as being non-compliant with the global anti-money laundering and combating the financing of terrorism, or AML/CFT regime, unless issues now before the court pertaining to the legal profession’s inclusion in the regime are resolved.
An affirmation of lawyers’ exemption, as is being argued by the Jamaican Bar Association, would render the country as continuing to be non-compliant, Minister of Finance and the Public Service Minister Dr Nigel Clarke declared.
Meanwhile, the Government is said to be pressing ahead with action, including legislation, to plug some 12 other loopholes that are among the 13 areas in which the county is now considered non-compliant with the AML/CFT anti-corruption regime. One area, that of completing a national AML/CFT risk assessment, has been completed, the minister is reporting.
The update emerged from presentations made during the opening session of the October 12-13 AML/CFT conference hosted by the Jamaica Institute of Financial Services and Jamaica Bankers Association.
Clarke, in the parley’s opening presentation, gave an update on the country’s efforts at compliance. His contribution was augmented by a report on Jamaica’s AML/CFT national risk assessment and mutual evaluation report by Dr Jide Lewis, head of the Bank of Jamaica’s financial institutions supervisory division, and Hope Wint, executive director of the BOJ’s prime contact secretariat of the Caribbean Financial Action Task Force, or CFATF.
The finance minister is of the view that the country has made significant progress in becoming compliant but still has a substantial way to go, including the resolution of the legal action that could reach the United Kingdom Privy Council, Jamaica’s final court of appeal.
The court case arose out of amendments to the Proceeds of Crime Act, POCA, 2007 and regulations, changes to the Legal Professional Act and Canons, and the issuance by the General Legal Council of Jamaica of anti-money laundering guidelines that compelled attorneys to report about money laundering and other possible financial crimes by their clients or face imprisonment.
The law, passed as an important pillar of Jamaica’s compliance with the global AML/CFT regime, also empowered the authorities to enter and seize documents from the offices of lawyers as part of the search of evidence of financial crimes.
The legal profession was granted temporary exemption from the law in a 2014 ruling by then judge Bryan Sykes, pending a hearing on the constitutionality of the legislation, while an appeal against that decision by the Attorney General’s Office was denied in a Court of Appeal ruling last year. A 2017 Supreme Court ruling had deemed the POCA legislation to be constitutional.
According to Clarke, Jamaica’s quest to improve its peer-reviewed mutual evaluation report by the Financial Action Task Force, FATF, arose out of the 2017 report of the country’s most recent rating done in 2015, and which showed that the country had structural deficiencies in its AML/CFT arrangements posing risks to the country and ultimately to the international financial system. The country was deemed to have been compliant or largely compliant with only 15 of 40 FATF recommendations and was placed on the organisation’s so-called ‘grey list’.
Last year 2020 Jamaica agreed to a time-bound action plan with FATF. The minister has called for the support of all sectors of the society to assist the country in honouring its commitments to become fully compliant with the AML/CFT arrangements and being removed from the FATF ‘grey list’ as well as the ‘blacklists’ of the European Union and the UK. The listings, he pointed out, serve as notice to financial institutions worldwide to exercise greater levels of due diligence when conducting financial and other transactions with Jamaica.
“Thank God, Jamaica hasn’t lost any significant correspondent relationships on account of these developments, but it is still not a good thing. It makes life a little more difficult,” said Clarke. “Enhanced due diligence when doing business with Jamaica is not something that we want to be sustained over the long term. We don’t want to be in this category,” he told the conference, which was held online for the first time due to the pandemic.
The finance minister had what he described as good news in this area, reporting that at CFATF’s December 2020 meeting Jamaica applied to be, and was, re-rated leading to improved ratings in 12 more of the 40 recommendations, leading to the country now being considered compliant overall in 27 of the recommendations.
Since then, he added, the country has completed another of the outstanding items – the completion of a national AML/CFT risk assessment. Others, including monitoring several non-financial institutions utilising risk-based supervision, preventing the legal profession from money laundering and financing terrorism by ensuring that beneficial ownership information disclosure is brought to international standards, ensuring that AML/CFT breaches are prosecuted, and making sure that the country’s non-profit sector is not open to be used for terrorist financing, are under way.
“In the designated non-financial businesses and professions, there is recognition that a lot of risks lie outside of the financial system. There is a lot of risk for money laundering in accounting, legal (profession), gaming, real estate development and sales, lotteries, etc, and we have to make sure that our regulators in each of those sectors are equipped to be able to engage in the enhanced risk-based supervision that is necessary for Jamaica to be fully compliant,” the finance minister said.
He noted the passage of the Microcredit Act last year and its accompanying licensing rules being crafted for regulation of the microlending sector by the BOJ as being among the “good and steady progress” made by the country. Trust and corporate service providers, he added, are being brought under the regime, with the necessary legislation having been tabled in Parliament two weeks ago, to be followed by debate and passage of the bill before year-end.
In keeping with international standards, the finance minister added, a further amendment is to be made to the Companies Act to ensure disclosure of beneficial ownership information, at least to regulatory authorities, where ownership exceeds 20 per cent.
He conceded that more work needs to be done, but efforts are progressing with respect to other sectors, including the betting, gaming and lotteries; real estate; and public accounting.
“There is a delay in bringing the legal profession fully under the AML/CFT framework. It is unlikely that Jamaica will emerge from the FATF grey listing and from the ancillary listing that other countries or regional blocs have put Jamaica on without a satisfactory resolution, meaning, without the legal profession being brought under the AML/CFT framework,” said Clarke.
“That provides a little bit of complication. Even if we addressed everything and this one is outstanding, whether it is in the courts or not, Jamaica is unlikely to emerge from the grey-listing,” the finance minister warned.