Don Wehby | On a path to achieving economic success
Excerpts from Senator Don Wehby's presentation to Parliament on the Companies (Amendment) Act 2017
This Bill is aimed at taking steps to make Jamaica compliant with international standards related to beneficial ownership, aimed at strengthening controls against the misuse of corporate vehicles and international exchange of information for tax compliance purposes.
In a recent Financial Action Task Force Report to the G20, on Beneficial Ownership, FATF (September 2016) indicated that international standards on beneficial ownership focuses on legal requirements for financial institutions, and other gatekeepers to collect and verify information on the ownership of legal persons and arrangements. It further indicated that this information should be reliable, and be readily available to investigators.
Implementation of these international standards has implications for some of the key areas we have to tackle as a country, if we are to achieve economic success. These key areas include money laundering and terrorism financing, corruption, lack of transparency, and poor corporate governance. The United Nations Department on Crime estimated that the total amount of criminal proceeds generated in 2009, excluding those derived from tax evasion, may have been approximately US$2.1 trillion, or 3.6 per cent of Global GDP in that year (2.3 to 5.5 per cent).
Criminals have gotten very sophisticated in their criminal activities. An article from the Guardian late last year indicated that "Fraud in the UK payments industry has soared by 53 per cent in a year as criminals resort to increasingly sophisticated tactics to trick people out of their personal details and steal their money". We have also been affected by the lotto scamming. These criminals hide behind the legal personality of companies that can channel their tainted money into the financial system to make it appear legitimate.
The rapid rise in cybercrimes, lotto scamming and terrorism requires an equally sophisticated response from governments to protect their country and its citizens. We must stand firmly against criminality and terrorism in all its forms. The amendments being proposed today therefore have a role to play in countering these serious crimes, which have become more prominent with the rapid change in technology and globalisation.
A COMPREHENSIVE REVIEW
There is one caution I'd like to raise in respect of some of the proposed penalties in the legislation. I believe that the penalty of $500,000 as reflected in clause 10 and 27 of the Bill is an insignificant amount for the types of offenders that the penalties would target. We have to send a strong message to criminals. This Bill helps us to send that message and I believe that a significant penalty conveys the seriousness of our position.
Transparency and corporate governance
Jamaica will offer a range of financial services through our International Financial Centre. Legislation was passed in this House to support the operation of the Centre. Our legal requirements for corporate vehicles must be able to withstand the most rigorous scrutiny. Sound corporate governance requires a healthy combination of transparency, integrity and accountability. In order to achieve this, persons who have ultimate control of companies and other legal structures must be known. The implications of not meeting the FATF Recommendations include, alienation of our financial system from the global financial community and loss of business opportunities and their related revenues.
Self-review for implementation of international standards and best practices
Our regulatory authorities which are often swamped by their workload, have been making a very good effort to ensure that Jamaica stays in the green zone for international regulation and compliance purposes. A lot of work has also been achieved through our participation in the Caribbean FATF, and this is commendable. However, we need to do more to ensure, that we meet international standards and best practices implementation deadlines we have committed to. In addition to this, any required updates to those standards and practices should be done in a timely manner. We shouldn't wait until there is a threat of blacklisting, a threat of losing major investment, severe public pressure or other potential backlashes before we take action to implement standards.
I'm calling for a comprehensive review of our compliance rate with international standards across all areas, to determine in which areas we are lacking. Thereafter, timelines should be set to adopt and implement them.
I am also proposing ongoing peer reviews to effectively monitor the implementation of international standards. The results of peer reviews should be shared with the public so that we can have a high level of accountability.