T&T faces possible sanctions over anti-money laundering measures

PORT OF SPAIN, Trinidad, CMC – Trinidad and Tobago stands the risk of being downgraded by the international community on matters relating to anti money laundering (AML), the financing of terrorism (CFT), Attorney general Faris Al Rawi has said.

He told Parliament Friday that the twin-island Republic, which also faces the possibility of the termination of its membership, had not met some of its obligations to the Caribbean Financial Action Task Force (CFATF) during its evaluation recently.

He said in 2005, Trinidad and Tobago underwent the Third Round Mutual Evaluation, focussing on legislative and other legally binding measures.

“We were rated non-compliant with 20 of the 40 recommendations and the Eight Special Recommendations on combating terrorist financing..

“We were thus placed into the CFATF follow up process and required to report at every biannual Plenary meeting on the progress made to rectify the outstanding deficiencies. Our country also underwent enhanced monitoring by the International Cooperation Review Group of the Americas (ICRG), an unprecedented two-tiered monitoring.”

But he said notwithstanding the country’s accomplishments between October 2009 and February 2010 to bring the system into compliance with the Financial Action Task Force (FATF), in February 2010 FATF grey-listed Trinidad and Tobago.

“Our Government’s commitment to bring the country in to compliance was however recognised, as the FATF statement acknowledged that our country had demonstrated progress in improving its AML/CFT regime and should continue to work on implementing its action plan to address the deficiencies identified in February 2010”.

He said Trinidad and Tobago was ultimately removed from the monitoring process of the FATF/ICRG initiative in October 2012 but remained in the CFATF Follow-Up Process.

“Trinidad and Tobago did not do all that was required to exit the Third Round by the November 2014 Plenary as scheduled. It was however agreed at that Plenary that the outstanding Third Round deficiencies would be merged into the Fourth Round. Assessment and thus reporting under the Third Round Mutual Evaluation Report came to an end.”

Al Rawi said that the fourth round Mutual Evaluation began with Port of Spain completing an extensive questionnaire in June 2014 as part of a desk based review and incorporated an on site assessment in January 2015.

“We agreed to this timeline in 2012 so there was adequate time to ensure we made substantial progress before the evaluation.”

But he told legislators “Trinidad and Tobago must now seek adjustments to the ratings and observations of the assessors as appropriate” .

He said the evaluation will culminate with the Report being discussed and finalised at the XLII Plenary this month, at which meeting Port of Spain will also ascend to the Chair of CFATF.

“On November 22 there will also be a meeting including representatives of Trinidad and Tobago, the assessors and reviewers in order to attempt to resolve any outstanding issues. Any resulting changes will be presented in the Compilation of Comments for Plenary document. The report will thereafter be considered by the Plenary when ratings will be finalised and with a determination subsequently being made as to what action is to be taken in respect of Trinidad and Tobago.”

He said no one should have expected Trinidad and Tobago to be cut any slack by its contemporaries in the mutual evaluation.

“There are already calls for further downgrades of some of the ratings given to our country. In respect of Immediate Outcome 1 (Risk, Policy and Coordination), the United States has recommended that we be downgraded from Moderate to Low.”

Al Rawi said gaps in respect of transparency of beneficial ownership of legal persons and regulation of the non-profit organisation sector are also high on the list of concerns of the Americans.

“With respect to Recommendation 29 – Financial Intelligence Units, Canada has recommended that we be downgraded from Largely Compliant to Partially Compliant based on the hiring system in respect of the FIU. Canada has also made similar recommendations in respect of Recommendations 27 (Powers of Supervisors) and 34 (Guidance and Feedback). In its submissions Canada also highlighted that several immediate outcomes point to substantial lack of effectiveness due to deficiencies with the sanctions regime.”

The Attorney General said Trinidad and Tobago will “strongly defend the national position” and that the inter ministerial committee will continue to work with the National Anti-Money Laundering and Counter Financing of Terrorism Committee (NAMLC) to select the strongest team to represent the country in the evaluation review.

“We have identified several statements and conclusions in the report that we view as inaccurate and which should consequently be reviewed and amended,” he said, adding “Trinidad and Tobago now finds itself on the brink of enhanced follow up. This will require more regular reporting than ordinary biennial reporting, with the exact frequency being determined by the Plenary in May 201612. The Plenary could also adopt other measures ranging from a letter being sent from the CFATF Chairman drawing attention to the lack of compliance with the FATF Standards, to suspension of membership in CFATF, to termination of membership.”

Al Rawi warned that any level of sanctions can have wide ranging negative impacts on the country and the citizens.

“The comments already received from the United States and Canada do not bode well for our position. The international investment marketplace is increasingly using Mutual Evaluations and Follow up Reports and data on AML/CFT compliance to place and maintain foreign direct investments,” he said.

Conversely, he noted that the country may encounter challenges to capital investments abroad by Government wholly or majority owned entities. He said that the ease of doing business in Trinidad and Tobago can be hampered.

“Financial institutions and intermediaries may be called upon to perform enhanced customer due diligence, increasing delays in processing of transactions and increasing cost (ultimately to the customer). Correspondent banking and foreign wire transfers may be slowed due to extra scrutiny and enhanced customer due diligence.”

Al Rawi said that international business transactions may be slower and more costly for local businesses and manufacturers.

“Locally issued credit cards, travellers cheques or foreign bank drafts may become vulnerable to non-acceptance abroad. Citizens may encounter increased hurdles in opening bank accounts and conducting other financial transactions in foreign jurisdictions and may face enhanced scrutiny at points of entry when travelling to destinations in North America and Europe.

“We are now faced with prioritising a large portion of the time and resources of the Executive, Legislature, technocrats and the business sector to being removed from enhanced follow up. These are resources which could otherwise be spent on expanding business opportunities for Trinidad and Tobago,” he told Parliament.

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