June 21, 2016: The following is a parliamentary statement delivered by Attorney General, the Honourable Faris Al Rawi regarding the Caribbean Financial Action Task Force's Mutual Evaluation report of Trinidad and Tobago:
Madame President, in November 13, 2015 I made a statement, that Trinidad and Tobago had undergone the Caribbean Financial Action Task Force’s (CFATF’s) Fourth Round Mutual Evaluation Process to assess our compliance with the Financial Action Task Force (FATF) Forty Recommendations, which are the international benchmark for an effective domestic Anti-Money Laundering/Combatting the Financing of Terrorism (AML/CFT) regime.
This Process assessed our AML/CFT systems as at January 2015 and entailed a rigorous examination of our laws, policies and enforcement track record. The Mutual Evaluation Report was adopted by the CFATF XLII Plenary in November 2015. But the Report was also subject to the FATF Global Quality and Consistency Review and analysis by FATF. The finalized Report was made public on June 3, 2016.
Trinidad and Tobago knew the Mutual Evaluation was on our horizon. The Third Round Evaluation was completed in 2005 and we were placed into enhanced follow-up and monitoring by the International Cooperation Review Group of the Americas (ICRG). The PNM administration faced these challenges head-on, taking steps to address these technical deficiencies by enacting 4 key pieces of legislation. These laws became the backbone for our AML/CFT legal framework and are the basis for improved ratings for technical compliance in the Fourth Round. In February 2010 FATF publicly acknowledged our progress in improving our AML/CFT regime and called for continued work on implementing our action plan to address remaining deficiencies.
While we were removed from the ICRG process in 2012, we remained in Enhanced Follow-up. The momentum gained by February 2010 was notmaintained and Trinidad and Tobago in fact did not address all the deficiencies required to exit the Third Round by November 2014 as scheduled. CFATF only allowed us to exit by merging the remaining deficiencies into our Fourth Round Evaluation.
The results of our Fourth Round Mutual Evaluation clearly demonstrate that after 2010 too little was done to address our technical deficiencies. Gaping holes were left in our AML/CFT framework. We were rated non-compliant for Recommendations 7 (Targeted Financial Sanctions Related to Weapons of Mass Destruction) and 8 (NPOs) and only partially compliant in respect of a further thirteen Recommendations. These include fundamental Recommendations such as Recommendation 1 (Assessing Risks and Applying a Risk Based Approach).
A National Risk Assessment was not completed in preparation for the mutual evaluation. Policy makers had no empirical data against which to test the efficacy of legislative, policy or operational measures. The country was shooting in the dark for solutions to national and international problems with a cascading effect of non-compliance with all other Recommendations.
As a result of these gaps, we now face the challenge of a three-tiered FATF/CFATF monitoring process. We were placed into enhanced follow-up, requiring more regular reporting to CFATF, with our First Follow-up Report due in May 2017. This will put tremendous demands on our country’s time and resources.
Madame President, effectiveness is judged against eleven Immediate Outcomes set out by FATF. A country qualifies for referral to the International Cooperation Review Groups of both CFATF and FATF, if it has low or moderate effectiveness for 9 or more of the 11 Immediate Outcomes. Madame President, we were rated as low/moderate for all eleven, and because of the size of our banking sector[1], we qualify for automatic referral to ICRG.
[1] BN US$15.98
This will be no walk in the park for us. We need significant improvements in our technical compliance and effectiveness to exit both ICRGs. We cannot exit Enhanced Follow up without first exiting ICRG, and with FATF ICRG supervision we may find ourselves on a FATF Grey list. This could lead to countless dire consequences for our citizens and economy such as de-risking of local banks, additional customer due diligence requirements, multi-national banks reconsidering their position in our local market and increased delays and costs of doing business in our country.
Madame President, fortunately this Government predicted these threats long before entering Office which is why we made AML/CFT reform a key component of our Legislative Agenda, prioritizing a suite of legislation which must be amended or enacted to bring our country into technical compliance. We have already drafted several powerful pieces of legislation to plug the gaps in our AML/CFT framework and towards “Taking The Profit Out of Crime”. Amendments to:
- the Financial Intelligence Unit of Trinidad and Tobago Act,
- the Mutual Legal Assistance in Criminal Matters Act,
- the Customs Act,
- Exchange Control Act, and
- Companies Act
will be brought before this Honourable House before the end of this calendar year. Amendments to the Proceeds of Crime Act and The Financial Obligations Regulations will shore up our defences, Madame President and when put alongside Civil Asset Forfeiture (Explain Your Wealth Leglislation) will finally put us in a real and meaningful position to protect our national patrimony from the savagery of corruption. The Credit Union Bill, Cooperative Society (Amendment Bill), Insurance Bill, Gambling, Gaming and Betting Control Bill and legislation to regulate Trusts, and amendments to the Income Tax Act are all on our legislative agenda.
We have taken a comprehensive view of this issue, adopting a whole of Government approach to AML/CFT. We do not operate based on theory. Our solutions are fact driven. We have moved swiftly to complete the National Risk Assessment as our foundation for compliance with all FATF Recommendations and Immediate Outcomes. The Office of the Attorney General and the Ministry of Legal Affairs established an Anti-Terrorism Desk which lists individuals and entities as terrorists and freezes their funds. I also convened ad-hoc multi-agency task forces to tackle deficiencies in our anti-terrorism and anti-terrorist financing framework, allowing for a quantum leap in inter-agency co-operation.
Madame President, in June 2016 the UN Regional Centre for Peace, Disarmament and Development in Latin America will work with us on legislation on the proliferation of weapons of mass destruction. Legislative and administrative systems to address Non-Profit Organziations and unmasking Beneficial Ownership for both legal persons and legal arrangements are aggressivley in train. This is a fundamental element of an AML/CFT framework which has inexplicably been left unadressed for far too long.
Legislation on non-conviction based confiscations will address gaps with respect to Mutual legal assistance. In that vein, this Government has already appointed the Seized Assets Advisory Committee.
We are not only seeking technical compliance by enacting legislation but we are ensuring that these laws are fully implemented and properly operationalized. A National Action Plan is being finalized to address all eleven Immediate Outcomes and will position us to exit the ICRG process in the shortest possible time. Work is however already underway in several key areas. We are examining all international conventions relating to anti-terrorism to determine where our country is non-compliant. I have also initiated an assessment of the current investigative procedures regarding anti-terrorist financing, which should also yield a framework to manage money laundering investigations. In December 2015 my office successfully listed the first individual as a terrorist and froze his assets. Further listings purusant to UNSCRs 1267 and 1373 are currently in train. No mere lip service here Madame President.
Our legislative agenda clearly demonstrates the priority we place on AML/CFT issues, but this is not a fight which the Executive can win on its own. It requires a demonstration of patriotism and devotion to country by all Members of this Honourable House and in the other place. The 11 Immediate Outcomes speak to areas which fall within the remit of constitutionally independent offices including the Judiciary and law enforcement agencies. However, Government remains committed to providing the resources and creating an enabling environment for judicial and law enforcement agencies to fulfill their mandate.
These are matters necessary to protect our citizens Madame President and to which this Government gives the highest priority.
Madame President, with these few words I thank you.