Jamaica still in AML de-risking danger
As Jamaica waits for an upgrade in its status as a potential hotspot for money laundering and terrorism financing, the senior legal counsel at the Bank of Jamaica, BOJ, is warning of possible sanctions.
Celeste McCalla says Jamaica, which is presently on a ‘grey list’ of countries that are only in the embryonic stages of implementing a proper anti-money laundering and counterterrorism financing, or AML/CFT, regime aimed at preventing the sort of financial corruption that can facilitate transnational crime and international terrorism.
Speaking at the ninth annual Anti-Money Laundering/Counter-Financing of Terrorism Conference, held virtually on Thursday and Friday, McCalla said Jamaica’s inclusion on the grey list does not prohibit the country or the banking system from doing business with other countries, but could make it more difficult to execute foreign transactions.
Citing the example of the European Union, McCalla noted that such countries may take a step back and be more cautious in dealing with Jamaica.
“Inclusion on the list is an alert to EU members that they need to pay particular attention to third states like Jamaica who have been publicly recognised as having strategic deficiencies in their AML/CFT framework. They would therefore have to examine how they manage any risks that they come across in doing business with Jamaica,” McCalla told the virtual conference.
The Financial Action Task Force, FATF, the global money laundering and terrorist financing watchdog, placed Jamaica and six other countries on the grey list in January. This came after a near 10-year period of monitoring which yielded Mutual Evaluation Reports that highlighted systemic deficiencies in banking, the economy and the financial, legal and regulatory environment. FATF is the intergovernmental body that sets international standards that aim to prevent these illegal activities and the harm they cause to society.
McCalla says Jamaica has been found to be deficient in several areas, including not having a National Risk Assessment, or NRA, done. This would ascertain institutional readiness and gaps or failures in stemming the financing of terrorist groups or money laundering. The BOJ legal counsel said Jamaica was also found to be lacking in its terrorism threat assessment of not-for-profit organisations, NPOs, or charitable organisations. In addition, Jamaica had not yet done an overall terrorism finance threat assessment.
She added that the country has run into problems in the past as a result of the perceived deficiencies.
“Jamaica faced a period of time when the there was a perception that we had deficiencies and we experienced some amount of de-risking on the part of correspondent banks. We worked hard to find our way through that difficult period,” McCalla said, recalling the time when remittances and other banking transactions were threatened by large overseas banks reviewing their association with Jamaica.
She says while a lot has happened to change Jamaica’s fortunes, the perception still lingers with the potential for more trouble.
“Unfortunately for us, we are at that juncture where we face possibilities of de-risking by trading and financial counter-parties and the application of other actions by some countries if they perceive that the risk to them and their financial sector is too great,” McCall warned, noting that the business sector may find that accessing credit could prove more difficult or more expensive.
The legal counsel says a lot has been done over the years to remedy the problem, citing as example the Banking Services Act 2015, BOJ guidance notes for AML/CFT to govern the implementation of necessary measures were passed but not put into effect, and the engagement and guidance given to ‘designated non-financial institutions’, including the gaming sector, attorneys, accountants and the real estate sector, about the measures that must be implemented.
McCalla says Jamaica has now done its NRA and is applying for re-rating, which will come up for evaluation later this month. This after the third follow-up review, which had been done in October 2019 and submitted in November that same year. The application will go before the plenary session of the next FATF meeting where it will be examined and a determination made, she said.