Thursday, March 8, 2012

Money Laundering in Jamaica - Part 1

Since my post on What is Due Diligence, the Minister of National Security, Mr. Peter Bunting made an announcement which is of relevance to this blog and all stakeholders in real estate transactions. He indicated that the Proceeds of Crime Act (POCA) is being strengthened to facilitate the seizure of assets of facilitators of illicitly acquired gains."

This announcement has been welcomed by members of both the local and international community. Media houses, participants in social media and internet puublications such as The Jamaica Observer, LinkedIn and Insight - Organized Crime in the Americas have weighed in and anti-money laundering professionals are taking note.

The government's concern may or may not have been precipitated by the listing of Jamaica as a "Country of Concern" in the International Narcotics Volume II Money Laundering and Financial Crimes March 2011 prepared by the US Department of State, pursuant to their Foreign Assistance Act. Whatever the case, it is noteworthy that among the factors included in deciding to place our country in the jurisdiction of concern category is an assessment of the country's legal framework to combat money laundering. Further, the report highlights the fact that drug money managers are attracted to jurisdictions with varied characteristics including:

  • large black market economics,
  • limited asset seizure or confiscation authority, and
  • limited money laundering and financial crime enforcement".
As an aside let me just clarify that Jamaica is not here considered as some sort of rogue state. We are in the company of countries like Barbados, Belgium, Chile, Ireland, Malaysia, Portugal and South Africa. We like many of those countries have been cooperating in the fight against money laundering but given the complex and stealthy nature of the activities involved, our systems are still vulnerable to penetration and so we do have some way to go if we are to avoid being perceived as attractive to money launderers.

Given the Minster's other comments that,
it is clear that these professionals and their clients will have to be on their guard. Lawyers and clients in real estate transactions must be aware that they are in a high risk environment. The banks know this and the government recognizes this. Unless lawyers adopt a risk based approach to managing these transactions they could find themselves being involved (even unwittingly) in money laundering.

The Financial Action Task Force (FATF)  2008 set out Guidance for Legal Professionals which   discusses the purpose of the risk based approach. No doubt this has been scrutinized by Bar Associations worldwide and it would be useful for us also to examine same which will we do in Part 2 in general and specifically in the context of the Jamaican experience.