Wednesday, August 19, 2009

Head of State assents to anti-money laundering legislation

Guyana Chronicle top story, Wednesday 19 August 2009 - "Head of State assents to anti-money laundering legislation" -

Minister of Finance, Dr Ashni Singh, yesterday announced that the Anti-Money Laundering and Countering of Terrorism Act was assented to by President Bharrat Jagdeo last Friday, setting the stage for Government to proceed with implementation of this important piece of financial sector legislation.

Minister Singh described the Act as modern and comprehensive, and consistent with international standards. He also stated that the provisions of the Act had benefitted from extensive examination and consideration while the Bill was before Special Select Committee in the Parliament.

According to the legislation, a person who, knowingly or having reasonable grounds to believe that property (money, investments, holdings, possessions, assets and all other property movable or immovable) is the proceeds of crime, and engages to conceal or disguise the illicit origin of that property, will be guilty of money laundering. Terrorist financing has been defined as willfully providing or collecting funds with the unlawful intention that they should be used to aid the execution of terrorist acts or in support of terrorist organisations or individuals.

Role of the Ministry of Finance
Under the Act, the Financial Intelligence Unit (FIU) within the Ministry of Finance is responsible for requesting, receiving, analysing and disseminating of suspicious transaction reports and other information related to money laundering, terrorist financing or proceeds of crimes.

The FIU will also compile a report and send it to the appropriate law enforcement authorities, if, having conducted its analysis, it has reasonable grounds to suspect that the transaction involves money laundering, proceeds of crime or terrorist financing.

The FIU shall also compile statistics and records, disseminate information received, issue guidelines to reporting entities and advise Minister Singh accordingly, or may conduct research into trends and developments in the area of money laundering or terrorist financing and improved ways of detecting, preventing and deterring money laundering and terrorist financing, and may educate the public and create awareness on such matters.

The FIU will be staffed by an attorney-at-law and accountant appointed by Minister Singh, and personnel training in financial investigation appointed by the Unit’s Director.

Anonymous accounts and accounts with fictitious names
The legislation specifies that financial institutions shall not establish or keep anonymous accounts or accounts with fictitious names. They have to establish and verify the identity of any customer by requiring the applicant to produce an identification record or any other reliable, independent source documents as the FIU may request.

Customer accounts must be kept in the true name of the account holder.

In the case of existing customers, financial institutions have to verify the identity of the customer within six months from the commencement of the legislation, which would be February 14 of next year, unless the Finance Minister extends the period for a further three months.

If the agency is unable to verify the identity of the customer at the end of that nine-month period, they will be required to terminate the business relationship with that customer.

Where it is suspected that an applicant is acting on behalf of another person, the financial institution shall establish the true identity of the person for whose ultimate benefit the applicant may be acting in the proposed transaction, whether as a trustee, nominee, agent or otherwise.

Also, financial institutions shall not maintain any business relationship with other banks that do not maintain a physical presence under the laws of which they were established (the laws of Guyana), unless they are part of a financial group subject to effective consolidated supervision.

Reporting obligations
Reporting entities, which include financial institutions, real estate agents, precious metal dealers, betting shops and other similar entities, under the legislation, are required to establish and maintain records for seven years of all transactions they complete with a customer and that customer’s personal information including the name, date of birth, address and occupation or business activity.

Reporting entities are required to pay special attention to complex, unusually large business transactions or pattern of transactions that have no apparent economic or lawful purpose, and business relations and transactions with persons in jurisdictions that do not have adequate systems in place to prevent or deter money laundering or terrorist financing.

Whenever a reporting entity suspects or has reasonable grounds to suspect that funds, a transaction or attempted transaction is connected to the proceeds of criminal activity, money laundering or terrorist financing offences, it shall, not later than three days after forming that suspicion, take reasonable measures to ascertain the purpose of the transaction, the origin and ultimate destination of the funds involved and the identity and address of the ultimate beneficiary, and prepare a report of the transaction and submit it to the FIU.

This requirement is also applied to attorneys-at-law, notaries, other independent legal professionals and accountants when, on behalf of a client, they engage in buying and selling real estate, managing money or the creation, operation or management of companies.

If the FIU, after consulting the entity that reported the transaction, is of the opinion that the transaction is suspicious, the Unit may direct the reporting entity not to proceed with the transaction for a period of not more than five days to permit the Unit to make necessary inquiries concerning the transaction and if deemed appropriate, to advise a supervisory authority.

The reporting entity shall appoint a compliance officer to ensure that the entity is meeting the requirement of the legislation.

Also, it must establish and maintain internal policies, procedures, controls and systems to satisfy its obligations under the legislation, establish an audit function to test its anti-money laundering and countering of terrorism financing procedures and systems, and train its officers to recognise suspicious transactions.

Role of supervisory bodies
The Governor of the Bank of Guyana, the Commissioner of Insurance, the Guyana Securities Council and a Special Assistance Committee appointed by Minister Singh will be the supervisory authorities for the purposes of this legislation.

The supervisory authority will also issue instructions, guidelines and recommendations, cooperate and share information with other domestic competent authorities, develop standards applicable to the communication of suspicious activities, cooperate, request and exchange information with agencies performing similar functions in other countries and territories and maintain statistics concerning measures adopted and sanctions imposed.

For breaches of obligations under this legislation, the supervisory authority may impose written warnings, orders to comply with specific instructions, order regular reports from the reporting entity on the measures it is taking, prohibit convicted persons from employment in the sector or recommend the reporting entity’s licence be suspended, restricted or withdrawn.

The supervisory authority shall inform the FIU as to the sanction imposed and may order the publication of its decision.

A person who has been convicted of a serious offence under this legislation, whether in Guyana or elsewhere, shall not be eligible or licensed to carry on business of a financial institution.

The Anti-Money Laundering and Countering the Financing of Terrorism Act represents a great stride forward for Guyana in combating crime by preventing criminals from accessing the resources they need to finance their activities and preventing them from enjoying the results of their actions. (GINA)

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