Fri | Aug 12, 2022

BLACKLISTED - Jamaica among 12 countries fingered as money-laundering slackers

Published:Sunday | May 17, 2020 | 8:43 AM

Romario Scott/Gleaner Writer

JAMAICA HAS been added to the European Union's (EU) blacklist of countries that have been accused of being too soft on money laundering, but Finance Minister Dr Nigel Clarke is pushing back against the characterisation.

“It is not good news that the European Union blacklisted Caribbean countries, including Jamaica, Barbados and the Bahamas,” Clarke said yesterday as he weighed in on the issue.

Back in February, Jamaica was among seven countries that were placed on a grey list by the Financial Action Task Force (FATF) for gaps or failures in stemming the financing of terrorist groups or money laundering.

The finance minister said that Jamaica ended up on the list because FATF has focused on countries where the economy’s size is above a certain threshold – having US$5 billion of financial assets using a monetary measure known as M2.

"In 2019, FATF arbitrarily changed this measure to what is known as M3, which is a broader measure of the economy. This arbitrary change meant that, for the first time, Jamaica exceeded the US$5 billion threshold, which meant Jamaica would be included in the list of countries that FATF would focus on and monitor, a process known as 'greylisting'," he said.

Professor Densil Williams attributed the country's blacklisting to a weak antiterrorism and anti-money laundering framework.

Panama, the Bahamas, Mauritius, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mongolia, Myanmar, Nicaragua, and Zimbabwe are said to “pose significant threats to the financial system of the Union” because of failings in tackling money laundering and terrorism financing.

“You don’t want to be on this for too long because it has implication for you playing into the global financial system. That can impact significantly on the way companies conduct international financial business.

“We don’t want to be sanctioned and then companies cannot encash their cheques in foreign countries. You can’t pay for your goods that you are buying overseas to come and sell in Jamaica; tourists come into your hotel, you can’t process their credit card because nobody is going to accept their credit card. These are implications that you will have on the ground,” Williams, pro-vice-chancellor for industry, academic partnerships and planning at The University of the West Indies, explained, stressing the need to speedily have the issues with the EU resolved.

Williams, a professor of international business, said that the Jamaica could be spared the full blow of the blacklisting but would need to rally support and explain to countries the steps being taken to address the EU’s concerns.

But Jamaica is in a bind because some players in the country refuse to be governed under the Proceeds of Crime Act, which is seen as critical to Jamaica being removed from the list.

Lawyers have dragged the Government to court as they have objected to being governed under some aspects of the legislation.

Opposition Leader Dr Peter Phillips has also pushed back against certain strictures that international bodies put in place, as he called for the right balance to be struck to ensure that legitimate businesses are not compromised.

“We have to ensure that the rules set by the international organisations are in our best interest,” Phillips told Parliament on Tuesday.

“While I have no issue with some of the rules, the way the rules are implemented makes life almost impossible for ordinary, legitimate businesspersons. The 'Know Your Customer' requirement can be an impediment,” Phillips had said back in January.

Mark Golding, the opposition spokesman on finance, yesterday blasted the Holness administration, labelling the Government as derelict.

“The Government, having been in power for over four years now, must accept full responsibility for this perilous development. It is clear that they have dropped the ball, endangering Jamaica by exposing our country to the negative consequences of this blacklisting,” Golding said, as he chided the administration.

But Clarke said the issues are not unique to Jamaica, as he fired back at Golding, accusing him of politicising the issue.

Clarke explained that the Government will be taking action to remedy deficiencies in Jamaica’s framework for addressing UN targeted financial sanctions related to terrorism; amend laws governing the regulation of trusts and the non-profit sectors in order to improve AML/CFT compliance; ensure an increase in money-laundering investigations that use financial intelligence, and amend the Companies Act to ensure that beneficial ownership disclosure standards are updated to be consistent with FATF standards.

“Jamaica has until late 2021 to complete its Action Plan. Once this is done, Jamaica will be removed from FATF’s greylist and the reversal of the EU’s action will also occur,” Clarke said.