By Kiana Wilburg
While many investors and residents abroad delight in the possible benefits of offshore banking in Guyana, the absence of strong Anti-Money Laundering legislation, and other essential regulations, leaves many in the local banking system uneasy over this prospect.
The fears are mainly premised on the fact that since the implementation of the Anti-Money Laundering and Countering the Financing of Terrorism Act (AML/CFT) 2009, there has not been a single prosecution. This is despite the fact that the Financial Intelligence Unit (FIU), in 2011, received a total of 858 reports of suspicious financial activity and only reported one to the Director of Public Prosecutions.
Financial experts attached to the banking system also fear that lack of enforcement of the necessary legislation and regulations could see Guyana becoming a conduit for “dirty money” if offshore banking is to become a feature of the financial landscape.
Offshore banking is where a person or entity can have an account outside of their resident country and be able to manage the assets. Countries which provide this financial service are then referred to as Offshore Financial Centre (OFCs).
OFCs usually propose different benefits to investors. These include low tax and regulatory regimes, and the ability to make deposits in foreign currencies, along with confidential services.
Former President Bharrat Jagdeo during a press conference in 2009 had said that government at the time contemplated having Guyana provide offshore financial services. However, he had noted that one of the reasons why there was a delay in the anti-money laundering legislation – one of the necessary requirements for OFCs – is that there was the need to make it more transparent.
“We had to make it compatible with being fully transparent,” Jagdeo had said.
Jagdeo stated that if the country was indeed to go down this path, he did not want it to be seen as a place where people could hide their money. The Anti-Money Laundering and Countering the Financing of Terrorism Act 2009 paved the way for the establishment of the FIU. With some “new muscle” in the form of an investigative arm being assigned to it—the Special Organized Crime Unit—it is envisaged that the FIU will commence serious investigations into money laundering.
There were all intentions to have Guyana become an OFC after the AML Act came into being, but this never materialized.
In an interview with Kaieteur News yesterday, the acting Governor of the Central Bank, Dr. Gobind Ganga, opined that the absence of the anti-money laundering legislation is what is hindering the transformation of Guyana into an OFC. He posited that even when government and the political opposition arrive at a consensus over the current amended Bill and it is passed, the government would have to conduct a cost benefit analysis for such a venture. He added that the prospect of Guyana being an OFC is high up on the list of financial transformations that government intends to make.
“Guyana becoming an OFC will certainly have benefits for the economy and once the legislation is passed, and the opportunity for us to become an OFC arises, we should not let it slip by. Being an OFC has always served countries well, in that, it has helped to boost the economy and has a lot of other economic spin-off effects, for example, the creation of employment. It even makes the economy more viable and attractive to foreign investors. However, without the proper regulations in place, it would be something that would not take off properly. It is a system that needs to be supported by strong legislation and regulations, if not, it would be a scary prospect,” Dr. Ganga asserted.
Several officials attached to commercial banks also asserted that offshore banking in Guyana would have many benefits, but given what has taken place with the 2009 legislation, it may be wise for the government to hold off on the idea.
“Of course such a service would benefit the country immensely, but there is a feeling that when it comes to dirty money, uncovering the perpetrators and putting them to face time, not enough transparency is evident there. Offshore banking has its advantages, but without strong legislation and the enforcement of such, Guyana would just become the perfect reserve for ill-gotten money,” one financial expert explained.
After the latest review by the American Regions Review Group (ARRG) in Florida, Guyana has not been made to suffer any sanctions for failure to pass, at the parliamentary level, the recommendations of the Caribbean Financial Action Task Force which are a part of the amended AML/CFT Bill.
Attorney General Anil Nandlall following the meeting had said that Guyana is in the process of putting the necessary alternative mechanisms in place to satisfy technical requirements for the assessment by the Financial Action Task Force (FATF).
FATF has since appointed a special body comprising representatives from the Americas to work with Guyana for the purpose of making a presentation of Guyana’s case to that body’s plenary meeting, slated for October 18 to 24 in Paris.
The Caribbean Association of Banks (CAB) recently appealed to Guyana to pass its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Amendment Bill urgently. It stressed too that mere passage of the critical bill will not be enough.
“The passage of the AML Bill is not only about Guyana, but also about the international financial sector as a whole in order to protect all financial systems within the region, from ongoing money laundering and terrorist financing risks. We are only as strong as our weakest link,” CAB’s Chairman, Carlton Barclay had said.
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