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15/07/2014 | Guyana May be Placed on Money Laundering Blacklist Amid Rise in Organized Crime

Kyra Gurney

Guyana is at risk of being placed on an international money laundering black list after the government failed to pass relevant legislation, even as organized crime in this remote South American nation is on the increase.


The Financial Action Task Force (FATF) -- a global financial crimes watchdog -- is currently reviewing Guyana's situation to determine whether or not to blacklist the country internationally. Guyana has already been blacklisted by the organization's regional affiliate, the Caribbean Financial Action Task Force (CFATF), and faces severe sanctions if the country's parliament does not pass more comprehensive legislation.

Although Guyana has had basic anti-money laundering legislation in place since 2009 (pdf), the country lacks the legislation necessary to implement these measures and has not yet put the legal tools in place to fight money laundering. Guyana does not have adequate programs in place for financial institutions to report suspicious transactions, for example, and as of June 10 had yet to investigate a single financial crime.

The CFATF first identified Guyana as a country with holes in its anti-money laundering legislation in 2011, and developed an action plan to address these issues with Guyanese authorities. Guyana's government introduced a bill to bring anti-money laundering legislation into line with international standards in April 2013, but opposition parties in the National Assembly have used the government need to pass the laws to pressure for several political concessions -- including the presidential approval of bills they have passed -- that must be met before they are willing to support the legislation. While the president and prime minister have pushed for stricter anti-money laundering measures, opposition parties continue to hold the bill hostage. 

After months of failed efforts, the CFATF blacklisted Guyana in November 2013, stating that there were "ongoing money laundering and terrorist financing risks emanating" from the country.

Once a country has been blacklisted, either at a regional or international level, other countries are encouraged to require their financial sector to impose stricter due diligence measures when completing financial transactions with the country's banks and other institutions.

Diana Firth, the Deputy Executive Director of CFATF, told InSight Crime that in addition to enhanced reporting systems, countermeasures could include foreign institutions refusing to complete a financial transaction involving Guyana or refusing to establish subsidiaries or branches of financial institutions in the country.

Although the FATF was expected to blacklist Guyana at the end of June during a plenary meeting, Alexandra Wijmenga-Daniel -- a FATF Communications Management Advisor -- told InSight Crime the organization is still reviewing Guyana's case. 

InSight Crime Analysis

Guyana's failure to strengthen its anti-money laundering legislation comes amidst growing concern about the presence of criminal organizations and the country's role as a drug transit nation.

Earlier this year, a political opposition leader stated that Guyana was "sleepwalking, step by step, into narco-statehood," and claimed drug trafficking was fueling gang warfare, money laundering, and murders in the country. His comments echo reports of the presence of large-scale drug trafficking organizations, which use Guyana as a transshipment point for cocaine headed to Europe and the United States.

In February, authorities in the United States and Italy dismantled a billion dollar trafficking network tied to Italy's 'Ndrangheta mafia, which allegedly involved a Mexican criminal group with a presence in Guyana as well as a Guyanese shipping company that smuggled cocaine and heroin in consignments of fruit and frozen fish.

Guyana's growing drug trafficking problem is exacerbated by a lack of resources and political will to combat crime. After the February drug bust, Guyanese President Donald Ramotar requested assistance from international law enforcement in investigating the drug trafficking network. The US government has recently announced it will open a Drug Enforcement Administration (DEA) office in Guyana.   

Ignacio Alvarez, a lawyer who specializes in anti-money laundering and corporate compliance law, told InSight Crime that Guyana's weak criminal justice system and its role in the drug trade are facilitating money laundering. "Guyana has a history of poor criminal justice reforms," he explained. "When [a country] has a weaker criminal justice system, organized crime and dirty money have a tendency to go into that country." 

The risk Guyana poses to the international financial system is limited by the small size of the country's financial sector. Sir Ronald Sanders, the former chairman of the CFTAF, wrote in an article that the CFATF was "over-exaggerating" the threat posed by Guyana. He said the assets and transactions of all Caribbean banks put together account for less than 1 percent of the international financial system, and added that in Guyana that figure was likely less than 0.1 percent.

Alvarez disagrees, however, arguing that Guyana offers criminal groups an opportunity to launder money and introduce illicit funds into the global market. "The financial sector is as strong as its weakest link," he explained. "If you have one country whose financial sector is very weak and dirty money is getting in, dirty money is getting into the financial sector worldwide."

In theory, blacklisting a country compels the government to address holes in the criminal justice system through economic pressure. According to Alvarez, blacklisting represents an especially serious blow to Guyana's economy, which depends heavily on the export of natural resources.

"In today's banks, especially US banks, their tolerance level is very low," he explained. "So when you deal with countries that are on the blacklist, most banks are just going to say 'I don't want to deal with you. I don't need you for business.' […] And a lot of banks have closed down their correspondent banking relationships with Guyana." He added that natural resource companies may soon decide to take their business elsewhere as well. 

In spite of intense economic and political pressure, however, the country appears nowhere near passing comprehensive anti-money laundering legislation. While political parties squabble over unrelated matters, the country's financial sector continues to offer ample opportunities for criminal organizations to launder illicit funds. (Estados Unidos)


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