T&T advised: Fight money laundering to make 2013 transparency list

Compliance with international anti-money laundering and combating the financing of terrorism (AML-CFT) standards is expensive, could drive small market actors out of business, but must be done urgently if Trinidad and Tobago is to get onto the list of transparent countries due out in January 2013.

The list will be produced by the 34-member country Financial Action Task Force. The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the ministers of its 36 member jurisdictions. Indicative of the slow pace of progress, Certified Anti-Money Laundering Specialist (CAMS) and attorney David West said on Saturday, “Financial institutions must appoint a compliance officer to ensure compliance with Section 55(3) of the Proceeds of Crime Act.”

There are 208 market actors in T&T, according to the T&T Securities and Exchange Commission (TTSEC) Web site. TTSEC general counsel Norton Jack said the commission is in receipt of only six applications for compliance officers to date. West and Jack were speaking at a paid event at the Hyatt Regency Trinidad hotel, Port-of-Spain, hosted by a Christian professional group called the Anointed Professionals Exhibiting Excellence (APEX), whose mission is “enriching the spiritual and intellectual lives of professionals.”

West admitted it was expensive to comply and that meeting compliance requirements may cripple or even drive some small companies out of business. He said the costs of an auditor must be met by the financial institution, customer due diligence must be done, a compliance officer must be hired, legal costs and more must be paid. Penalties on financial institutions that do not comply start at $700,000.

At the seminar, West also lectured on politically exposed persons (PEPs). He said new requirements will also cover family members or close associates of PEPs. Also speaking at the event, Roger Hernandez, financial adviser at Caribbean Financial Action Task Force (CFATF), said T&T figures among “members with low levels of core and key compliance.”

He said while other countries in the region including the Cayman Islands and Honduras had taken actions to improve their standings, T&T is still on a grey list. He said T&T needed to “correct outstanding deficiencies and seek removal from the ICRG process.” ICRG is the acronym for the International Country Risk Guide. Every country must do a national risk assessment. T&T is still in the process.

T&T has a very short time to “address and fully satisfy the deficiencies noted in their Third Round Mutual Evaluation Reports,” Hernandez said. From October 17-19, an FATF plenary meeting in Paris will be “reviewing the implementation of measures taken by a number countries to address deficiencies identified in the last round of mutual evaluation reports,” and T&T could find itself off the one list that will exist after January 2013. Right now there is an A list and a B list, often referred to as the white list and the grey list. As of January 2013, there will be only one list.

Asked how T&T did in third round evaluation, Hernandez said he could not say until the document was made public, but would only echo what National Security Minister Jack Warner said, which was that he “is confident that T&T will pass with flying colours.” TTSEC general counsel Jack told the seminar, “The harsh reality is that we are in the mode of trying to get it right. A lot of the onus rests on the companies” that are still to comply.

Jack said, “The countries where they have it right are the countries with people dedicated to only that. In T&T it’s the same people doing other work, doing multiple things at the same time.” Jack told the audience, “Terrorism is costly and therefore exerts pressure on the financial enablers.”

Following September 11, 2001, “The world has chosen to attack terrorism at its most vulnerable point: its financing.” Jack said “the securities industry has been targeted” by money launderers and terrorism financiers because of its high liquidity, voluminous cash movement and transaction speed.

Jack told the Christian professional group the TTSEC is considering getting its staff certified as CAMs. “Businesses cannot continue business as usual,” he said. If suspicious activity is detected, Jack advises businesses to forego the income. He said, “Refusing the business may be the detriment of your business, but it may also be saving your business.”