T&T on brink of being blacklisted again

Considering all the legislation and infrastructure that have been put in place over the past few years, it is alarming that Trinidad and Tobago has not improved on its dismal track record on enforcing anti-money laundering laws and combating the financing of terrorism (AML-CFT) laws. Not for the first time, this country faces being blacklisted by the Financial Action Task Force (FATF), the global body which develops and provides international policies to combat money laundering and terrorist financing—this time for failing to prosecute even one of the $832 million worth of suspicious activity reports (SARs) generated since 2010. Early last year, T&T faced censure by the FATF for slow progress on implementation of significant components of its action plan. The country was placed on the “dark grey list” and was forced to fast-track the implementation of compliance efforts, including adequate procedures to identify and freeze terrorist assets without delay and establishing a fully operational and effectively functioning Financial Intelligence Unit (FIU), inclusive of supervisory powers. On that occasion, T&T narrowly avoided public identification by the FATF. Now, just over a year after that close shave, there is a warning from attorney and certified anti-money laundering specialist David West that T&T, still firmly lodged on the FATF grey list, risks falling into the black list by 2014. 

 

West’s revelations are certainly not in sync with what the country has been hearing from the FIU. In its most recent annual report, the unit described 2011 as a year of “rapid development” and claimed major successes in combating money laundering and terrorist financing. Among the successes highlighted by the FIU was a tripling in the number of SARs and suspicious transaction reports (STRs) which it said was due to greater awareness in detecting and reporting, as well as “aggressive outreach campaigns and training efforts.” The FIU needs to explain why, with $500.47 million worth of SARs/STRs already detected for the first half of this year, the only AML-CFT related cases in the pipeline are the Vicky Boodram case and the Piarco Airport corruption case. Since the latter has been at the centre of major national controversy in recent days, it is clear that the FIU is not making sufficient progress in its AML-CFT activities. And it isn’t only with prosecutions that the FIU seems to be failing. 

 

The unit also hasn’t been making sufficient progress in its evaluation reports to the FATF outlining AML-CFT measures that have been put in place locally. In fact, T&T is not even ready for the 4th Round of Mutual Evaluation Reports. Full FATF compliance is essential if T&T is to maintain its ability to access the international financial system and conduct international transactions, such as trade financing, payments, etc. Word from the business and banking sectors is that such activities have already been severely curtailed. The country certainly cannot afford a repeat of the situation that occurred in December 2010, when T&T was placed on a restricted-country list by TD Ameritrade, Scottrade and Options Xpress as a country that they “do not conduct business with.” The worst-case scenario, if there is continued non-compliance, is lengthy delays in completion of foreign-currency cross-border-payment transactions, with huge penalties and losses for local businesses, as well as an increase in the cost of doing business in T&T and limited access to transactions. More than two years ago, T&T made a high-level political commitment to work with the FATF to address AML/CFT deficiencies. Since then, the country has barely been keeping ahead of the FATF blacklist, despite claims to the contrary from the  Government and the FIU.

Lip service is not enough.