No timeline for Jamaica to be struck from FATF grey list

The passage of the Companies (Amendment) Act 2023 in late March may have removed the immediate threat of Jamaica being blacklisted by the Financial Action Task Force (FATF), but despite satisfying additional standards set by the global watchdog on money laundering and terrorist financing, there is no indication as to when Jamaica will be taken off the so-called grey list.

While admitting that the Government was unable, at this time, to state when the country will be removed from the FATF's grey list, Minister of Industry, Investment and Commerce Senator Aubyn Hill told The Gleaner on Monday that the Andrew Holness administration was “completely committed to being compliant and continuously compliant so that, in the nearest possible time, the country can get off that list”.

Hill pointed out that it was the FATF and the Organization for Economic Cooperation and Development who determine whether Jamaica should be struck from the grey list.

The FATF holds to account countries that do not comply with its standards. Those which repeatedly fail to implement FATF standards are tagged as 'jurisdictions under increased monitoring' or a 'high-risk jurisdictions'. These are often externally referred to as “the grey and black lists”.

“What happens here is not only must you come off the list, but you must be seen to be performing according to the rules, because, at some point, you were placed on the list and were adjudged to have not been following the rules and, therefore, put on a grey list,” Hill said.

In a recent parliamentary debate to pass the Companies Amendment Act 2023, the Opposition said it could not support the legislation and called a divide at the committee stage. Six members of the Opposition who were present abstained during the voting process, while 22 government lawmakers gave the bill the nod.

The bill was passed with 26 amendments in the House of Representatives and later received approval by the Upper House.

However, the passage of the bill had a rocky ride as Opposition Leader Mark Golding declared that the Government was “disgracefully inept” in how it handled the tabling and debate of a complex piece of law.

Finance and the Public Service Minister Dr Nigel Clarke, who piloted the bill, had acknowledged that it was “suboptimal to be tabling a bill of this nature and of the complexity on the same day that the House will be moving for its passage”.

He said, however, that had the bill failed to receive passage before March 31, the country would not have been able to deliver on its international commitments in reforming its anti-money laundering framework.

Clarke said that although it was undesirable to table the bill and pass it on the same day, he had no choice but to seek the cooperation of his colleagues, given the negative implications if it was not passed before the end of March.

But his appeal did very little to assuage Golding, who hammered the Government for introducing a 201-page bill with 64 provisions for passage on the same day.

Golding said that he was disheartened by what the Parliament had been asked to do, noting that he had not been given sufficient time to review the bill thoroughly.

“I think it is the heights of negligence and poor governance that a bill of this nature, so complex and far-reaching, is being brought to the House on March 28 when the Government said it is facing a deadline of March 31 for its passage. That is a disgracefully inept Government,” he charged.

He complained that there was no transitional provision in the bill, noting that a senior legal counsel in the area of company law had raised this concern with him.

During the debate, Golding urged the minister to accede to an amendment to Clause One to provide a provision to allow it to come into force at a later date; however, this was not accepted.

“FATF cannot force Jamaica to pass laws that have not been properly reviewed by legislators in this country; that is an aberration on governance,” Golding said.

An attorney who practises company law, Golding charged that 99 per cent of the lawmakers had “no clue” as to what was in the bill despite passing it.

“It is a poor and unfortunate way of proceeding,” he added.

Noting that he was only able to take a cursory glance at the law, Golding said that Clause Four of the bill states that no company incorporated in this act shall have a nominee shareholder.

The opposition leader said that a nominee shareholder is not a defined term in the principal act and that the vast majority of companies in Jamaica are incorporated by persons in the office of the attorney signing the articles of incorporation.

“They do so as a nominee for the client and that is subsequently rectified thereafter. I don't know how many companies are going to be immediately in breach of this,” he said.

“Let us not proceed with haste that makes waste,” said Golding.

Debating the Companies Amendment Act, 2023 in late March, Clarke outlined some of the elements of the bill that companies would now have to comply with.

In combating money laundering, one of the key areas of focus is to ensure that legal structures and arrangements cannot be used to launder ill-gotten proceeds, Clarke said.

He explained that a mechanism should be in place locally whereby competent authorities have access to the beneficial ownership information of legal persons.

Clarke said that the deficiencies in the previous law were that not all legal persons are required to maintain current and accurate information on directors, shareholders and beneficial owners.

“Further, he said that there was no appropriate provision in the law to ensure that effective, proportionate, and necessary sanctions are applied against companies that do not comply with filing and record-keeping requirements.

At the time the bill was debated, among the outstanding items in Jamaica's action plan with FATF was the matter of strengthening the beneficial ownership framework. The Government had given the commitment to amend the Companies Act to ensure that the definition of beneficial ownership was in line with FATF standards.

Jamaica's earlier action plan that agreed with the FATF expired in January 2022 without all 13 actions being complete.

Clarke told his parliamentary colleagues in late March that nine actions had largely been met with four partially addressed.

He said that owing to the fact that Jamaica did not complete the action plan within the stipulated timeline, the country was in imminent danger of being blacklisted by FATF.

The finance minister said that passage of the amendments to the Companies Act addressed three of the four outstanding items agreed upon with FATF.

He said that the passing of the bill now brings the country's action plan within striking distance of being achieved.

“It gives Jamaica a fighting chance of emerging from the grey list, even though FATF is concerned not only with the passage of the bill but with the operationalisation of its contents.”

editorial@gleanerjm.com