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Al-Rawi wary of financial law deficiencies

Published: 
Saturday, November 14, 2015

The ease of doing business in T&T could be hampered by recent downgrades of the country by the US and Canada concerning our compliance with Caribbean Financial Action Task Force (CFATF) recommendations, Attorney-General Faris Al-Rawi said yesterday.

In a statement to Parliament in which Al-Rawi also announced T&T had now assumed the chairmanship of Caribbean FATF, he said, “This Government fully acknowledges its responsibility to the people and the international community to achieve effective systems to address the threats of money laundering, the financing of terrorism and the proliferation of weapons of mass destruction. As the incoming chair of CFATF and host nation of the secretariat, we have an even higher duty in this regard.”

The FATF’s 40 recommendations include implementing adequate procedures to identify and freeze terrorist assets without delay, implementing adequate procedures for the confiscation of funds related to money laundering and ensuring a fully operational and effectively functioning Financial Intelligence Unit, including supervisory powers.

The evaluation used to verify compliance with FATF recommendations involves a team of regional experts in the legal, financial and law enforcement fields examining T&T’s regime on the issue.

Al-Rawi said T&T’s fourth-round evaluation in June 2014 included a site assessment in January 2015.

“T&T must now seek adjustments to the ratings and observations of the assessors as appropriate. The evaluation will culminate with the report being discussed and finalised at the XLII Plenary this month, when we’ll also ascend to the chair of CFATF.”

On November 22 there will also be a meeting, including T&T representatives, the assessors and reviewers, to attempt to resolve any outstanding issues. At that meeting, ratings will be finalised and a determination made on what action is to be taken in respect of T&T.

Al-Rawi added: “No one should have expected T&T to be cut any slack by its contemporaries in the mutual evaluation. There are already calls for further downgrades of some of the ratings given to our country. 

“In respect of Immediate Outcome 1 (Risk, Policy and Coordination), the United States has recommended that we be downgraded from moderate to low. 

Gaps in respect of transparency of beneficial ownership of legal persons and regulation of the non-profit organisation sector are also high on the list of concerns of the Americans. 

“With respect to Recommendation 29—Financial Intelligence Units, Canada has recommended that we be downgraded from ‘largely compliant’ to ‘partially compliant’ based on the hiring system in respect of the FIU. Canada has also made similar recommendations in respect of Recommendations 27 (Powers of Supervisors) and 34 (Guidance and Feedback).”

Al-Rawi added, “Canada also highlighted that several immediate outcomes point to substantial lack of effectiveness due to deficiencies with the sanctions regime. The Government will strongly defend the national position. 

The inter-ministerial committee will continue to work with the National Anti-Money Laundering and Counter Financing of Terrorism Committee to select the strongest team to represent the country in the evaluation review. We’ve identified several statements and conclusions in the report that we view as inaccurate and which should be reviewed and amended.”

Al-Rawi said the upcoming plenary could also adopt other measures, ranging from a letter being sent from the CFATF chairman drawing attention to the lack of compliance with the FATF Standards, to suspension of membership in CFATF, to termination of membership.

“Any level of sanctions can have wide-ranging negative impacts on the country and citizens. The comments already received from the United States and Canada do not bode well for our position. 

The international investment marketplace is increasingly using mutual evaluations and follow-up reports and data on AML/CFT compliance to place and maintain foreign direct investments.

“Conversely, we may encounter challenges to capital investments abroad by government wholly or majority-owned entities. Multi-national financial institutions may also reconsider their tenability in a country with weak ratings to avoid being stained through association and possible declines in their share pricing.”

The ease of doing business in T&T, especially through financial institutions, could also be hampered, he said. Al-Rawi said T&T would likely have to report on further progress in May 2017.

Action

AG Al-Rawi said a complete assessment of the legislative requirements to correct the legislative deficiencies would be completed shortly, including key amendments to address confiscation and restraint of assets under the Proceeds of Crime Act and the freezing of assets under the Anti-Terrorism Act. 

The Anti-Terrorism Act will also be amended to strengthen the terrorism and terrorist financing sanctions regime, including financing travel for the purpose of partaking in terrorist training. 

“We’ll explore amendments to the Financial Intelligence Unit Act to allow for greater autonomy and strengthened powers of this critical regulator,” he said. 

“The Mutual Assistance in Criminal Matters Act will also be amended to allow the Central Authority to accede to a request that relates to a criminal offence under the tax laws of a Commonwealth country. 

“Procedural mechanisms to support the legislative regimes will also be strengthened, including, for example, the formalisation of a case management system for the Central Authority and the implementation of the seized assets fund. Greater emphasis will also be placed on effectiveness mechanisms.”

Al-Rawi said higher priority must be given to the investigation and prosecution of offences. 

“This will require us to ensure that institutions such as the Financial Investigations Branch (FIB) and the DPP are staffed by adequately trained and experienced personnel and there is effective communication and information sharing among the intelligence community, law enforcement investigators and prosecutors...” 

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