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  • FATF congratulates Guyana on AML/CFT Improvements

    FATF congratulates Guyana on AML/CFT Improvements

    Alicia Nicholls

    At its recently held plenary session on October 19-21, 2016, the Paris-based Financial Action Taskforce (FATF) congratulated Guyana on the “significant progress” the country has made in addressing the deficiencies in its framework for anti-money laundering/combatting the Financing of Terrorism (AML/CFT).

    Background

    Since its establishment in 1989, FATF has sought to protect the integrity of the global financial system from threats posed by money-laundering (ML), terrorist financing (TF) and the financing of proliferation of weapons of mass destruction. Its main role is setting and promoting standards on these areas and its 40 plus 9 Recommendations are the international standards for AML/CFT and the financing of the proliferation of weapons of mass destruction. FATF’s work is complemented by the nine FATF-style regional bodies, including the 27-member Caribbean Financial Action Task Force (CFATF), of which Guyana has been a member since 2002.

    The AML/CFT Mutual Evaluation is a peer review process to evaluate each member country’s level of compliance with FATF’s Recommendations. These reviews are concerned not just with the jurisdiction’s technical compliance with the recommendations but also now with the effectiveness of the country’s AML/CFT systems.

    CFATF was very critical of Guyana’s technical compliance with the FATF recommendations in its third round Mutual Evaluation report dated July 2011. Inter alia, the reviewers had highlighted several deficiencies in the Anti-Money Laundering and Countering of the Financing of Terrorism (AML/CFT) Act 2009, the  lack of statistics, staffing shortages and limited staff training. As a result, the country was placed on expedited follow-up and required to report every Plenary. Due to internal political wrangling over the proposed bill’s content, for many sittings Guyana’s legislature could not pass the proposed amended AML legislation.

    This inaction, however, had several negative consequences. Starting in May 2013, CFATF had named Guyana among its list of jurisdictions with strategic AML/CFT deficiencies that had not made sufficient progress in addressing them and had warned that if Guyana did not take specific steps by November 2013, not only would it call upon its members to consider implementing counter measures to protect their financial systems from the ongoing ML/TF risks emanating from Guyana but would consider referring the country to the FATF International Cooperation Review Group (ICRG) which analyses the AML/CFT threats from high-risk jurisdictions.

    After Guyana had failed to meet the agreed timelines in the action plan, the regional watch body followed through on its threat in its public statement released May 2014 in which it called on its Members to “consider implementing further counter measures to protect their financial systems from the ongoing money laundering and terrorist financing risks emanating from Guyana”.

    That language may sound extreme to the reader considering that Guyana is not an international financial centre and any AML/CFT lapse is unlikely to cause even a ripple in the global financial system. Regulatory costs are burdensome for cash-strapped small states which often lack the financial resources and the human resource capacity to meet all the requirements. What little technical assistance is given is often not adequate. As countries which are not members of FATF Caribbean countries also have little say in the regulatory framework or agenda which are often slanted towards the interests of advanced economies.

    However, these important inequities aside, a sound AML/CFT framework is important for countries, especially those with porous borders and which are dependent on foreign investment and foreign trade. Having a reputation for a deficient AML/CFT framework could make it difficult for an FDI-dependent country to attract new investment as some parent companies may prohibit the establishment of subsidiaries in a country with a deficient AML/CFT regime. It also increases the country’s risk profile which would make financial transactions and relationships with businesses and persons in that country subject to enhanced due diligence due to the higher level of perceived risk, increasing the chances of its local banks losing their foreign correspondent banking relationships and  thereby restricting its access to the global trade and financial systems.

    Guyana’s progress to date

    Since coming to power in 2014, the new government in Guyana has been able to implement several reforms to improve the country’s level of compliance with FATF recommendations. These changes have been well-documented in this article by Anand Goolsooran. However, some of those identified in CFATF’s 10th Follow Up Report released June 2016 include the passing of the AML/CFT (Amendment) No.2 Act 2015 in January 2016 and  of the AML/CFT (Amendment) Act No. 15 of 2016 in May 2016 and the issuance of AML/CFT Directives and Guidelines.

    As a result, the CFATF assessors concluded as follows:

    Guyana has significantly improved its overall level of compliance and most importantly Guyana has fully addressed the core and key Recommendations. While Guyana satisfies the criteria for application to exit the follow-up process, it is still in the FATF ICRG process which it needs to complete first. As such it is recommended that Guyana stay in enhanced follow-up and be required to report on continuing implementation to the next Plenary in November 2016

    In mid-September 2016, the visiting FATF/ICRG delegation praised Guyana’s progress towards bringing its framework in compliance with FATF recommendations.  As of October 2016, Guyana is no longer subject to FATF’s on-going global AML/CFT compliance process.  Guyana will continue to work with CFATF to address the outstanding issues with the goal to exit the CFATF follow-up process.

    The outcomes of the FATF October 2016 Plenary session may be viewed here.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • US eases some restrictions on Cuban imports for personal use

    US eases some restrictions on Cuban imports for personal use

    Alicia Nicholls

    On October 14, 2016 the United States Department of Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) announced further amendments to the Cuba Sanctions Regulations. These changes became effective today (October 17, 2016) and include not just an ease on restrictions of Cuban imports, including alcohol and cigars, for personal use, but also facilitation of joint Cuba-US medical research and a variety of other trade measures.

    Since the early 1960s, successive US governments have imposed an illegal economic, commercial and financial embargo on Cuba which is not only contrary to international law but has hindered the country’s economy development. In December 2014 US President Barack Obama outlined a new direction to normalise Cuba-US relations. Efforts at normalisation since 2014 have included, inter alia, the removal of Cuba from the US State Sponsors of Terrorism List in May 2015, the re-opening of embassies in July 2015 and the progressive relaxation of some sanctions.

    However, US congressional action is needed to reverse the embargo. The embargo has been widely condemned by the international community. On October 26th, the UN General Assembly will be called on for the 25th consecutive year to vote on a Cuba-introduced resolution calling for an end to the five-decade long embargo.

    Current Amendments to Cuba Sanctions Programme 

    The current tranche of amendments to the Cuban Assets Control Regulations (CACR) and the Export Administration Regulations (EAR) cover the following three broad areas:

    • Expanding opportunities for scientific collaboration and access to medical innovations
    • Facilitate increased humanitarian support, grant opportunities and improve Cuban infrastructure
    • Bolster trade and commercial activities and the growth of Cuba’s private sector

    Some of the specific amendments are as follows:

    • Authorisation of joint-medical research with Cuban nationals for non-commercial and commercial research
    • Importation , marketing, sale and distribution in the US of FDA-approved Cuba-origin pharmaceuticals
    • Persons who engage in those above activities will be allowed to open and maintain bank accounts in Cuba for use in conducting authorised business
    • Authorisation of grants, scholarships and awards to Cuba or Cuban nationals for scientific research and religious activities
    • Authorisation of persons subject to US jurisdiction to provide services to Cuba or Cuban nationals relating to developing, repairing, maintaining and enhancing certain Cuban infrastructure to directly benefit the Cuban people
    • Removal of monetary value limitations on what authorised travelers may import from Cuba into the US as accompanied luggage. These include Cuban alcohol and cigars. However, the imports must be for personal use and normal limits on duty and tax exemptions will apply.
    • BIS will generally authorise exports of certain consumer goods that are sold online or through other means directly to eligible individuals in Cuba for their personal use
    • Expanded general license by OFAC authorising persons subject to US jurisdiction to enter into certain contingent contracts for transactions currently prohibited by the embargo, subject to conditions.
    • OFAC authorisation of importation into the US or a third country of items previously exported or re-exported to Cuba under a BIS or OFAC authorisation

    Comprehensive information on all of the amendments may be obtained via the US Treasury Department’s website here.

     Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • BRICS Summit 2016: Five Key Trade Takeaways

    BRICS Summit 2016: Five Key Trade Takeaways

    Alicia Nicholls

    The BRICS grouping, comprising of the emerging economies of Brazil, Russia, India, China and South Africa, held its 8th Summit in Goa, India under the theme “Building Responsive, Inclusive and Collective Solutions” October, 15-16, 2016. India currently holds the chairmanship of the five-nation grouping.

    Here are the main trade takeaways from the Summit:

    1. Support for the WTO-based Multilateral Trading System

    The BRICS leaders have reiterated their support for the rules-based multilateral trading system and the World Trade Organisation’s centrality. Leaders noted the increased spaghetti bowl of bilateral, regional and plurilateral trade agreements and advocated that these agreements should be complementary to the multilateral trading system. According to the Goa Declaration, BRICS leaders also encouraged parties to ” align their work in consolidating the multilateral trading system under the WTO in accordance with the principles of transparency, inclusiveness, and compatibility with the WTO rules.”

    2. Continued support of Doha Development Agenda

    Contrary to the G20 Statement where the Doha Development Agenda was essentially scrubbed from the trade vocabulary, BRICS leaders reiterated their support for advancing negotiations in the DDA, reflecting the sharply divided opinion on the future of Doha  which was demonstrated in the Nairobi Ministerial Statement. They also emphasised the importance of implementing the decisions taken at the Bali and Nairobi Ministerial Conferences and urged all WTO members to work together to ensure a strong development oriented outcome for MC11 and beyond.

    3. Promoting BRICS Economic Cooperation

    The BRICS leaders praised progress made so far on the implementation of the Strategy for BRICS Economic Partnership and emphasised the importance of the BRICS Roadmap for Trade, Economic and Investment Cooperation until 2020.

    4. Improving intra-BRICS Customs Cooperation

    The BRICS leaders commended the establishment of the Customs Cooperation Committee of BRICS and the signing of the Regulations on Customs Cooperation Committee of the BRICS in line with the undertaking in the Strategy for BRICS Economic Partnership to strengthen interaction among Customs Administrations.

    5. Double intra-BRICS trade by 2020

    In his plenary address, India’s Prime Minister Narendra Modi called on fellow BRICS leaders to double the value of intra-BRICS trade to $500 billion by  2020. According to Prime Minister Modi, intra-BRICS trade was $250 billion in 2015. He further noted that this target would require “businesses and industry in all five countries to scale up their engagement” and “for governments to facilitate this process to the fullest”.

    The full text of the Goa Statement may be accessed here.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • Caribbean Trade and Development Weekly Digest – October 2-8, 2016

    These are some of the major trade and development headlines and analysis across the Caribbean region and the world for the week of October 2-8, 2016. 

    For past issues, please visit here.

    Regional

    China tariffs and NTBS inhibit Caribbean and Latin America imports

    Stabroek: Prohibitive tariff and non-tariff barriers for trade between China and Latin America and the Caribbean (LAC) continue to seriously inhibit the prospects for the export of both agricultural and manufactured goods to the world’s single largest market, according to a recently concluded study done by the Inter-American Development Bank (IDB).. Read more

    World Bank says Caribbean beginning to show signs of recovery

    Trinidad Express:The World Bank says Latin America and Caribbean countries are showing signs of economic recovery and an increased volume of exports, including new products in higher quality niches. Read more

    International

    Pound hit by ‘flash crash’ in biggest crash since Brexit

    Euractiv: The pound suffered a “flash crash” Friday morning, its biggest drop since Britain voted in June to leave the EU, with confused traders scrambling to understand the reason for the sharp sell-off. Read more

    Forget Brussels, Brexit’s Toughest Battleground is the WTO

    Politico.EU: WTO’s accession chief says Britain’s departure from the EU creates an unprecedented situation that could take years to resolve.Read more

    Appellate Body issues report regarding EU duties on biodiesel from Argentina

    WTO: On 6 October 2016, the WTO Appellate Body issued its report in the case “European Union – Anti Dumping Measures on Biodiesel from Argentina” (DS473). Read more

    WTO and IFC leaders discuss action to tackle trade finance shortfall

    WTO: A large and growing shortfall in trade finance is stymieing growth and development because smaller enterprises are denied access to funds which are critical to their participation in global trade. Read more

    New Survey Finds Worsening Global Shortage of Trade Finance

    ICC: Small- and medium-sized enterprises (SMEs) and African countries are suffering the most from a deepening global trade finance gap according to the ICC 2016 Global Survey on Trade Finance. Read more

    Australian Negotiators arrive to begin post-Brexit trade talks

    Telegraph: Australian officials are ready to begin work on a free-trade deal with the UK, and have recently flown in to begin hammering out the details of a landmark pact, the country’s top official in Britain has revealed. Read more

    EU, US negotiators officially drop aim of concluding TTIP in 2016

    EUrativ: Negotiators on both sides of the Atlantic have clearly given up on the idea of concluding TTIP talks this year, despite progress achieved on the technical aspects of the negotiations.Read more

     

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    For past issues, please visit here.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.