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Strong opposition to proposed changes to Money Laundering Act

by Balford Henry Observer writer

Sunday, November 14, 2004    

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Opposition spokesman on finance Audley Shaw says that safeguards are needed to protect Jamaican citizens from the arbitrary exercise of power by the minister of finance and financial agencies in the new money laundering measures.

"A vindictive minister of finance could abuse his power and abuse the rights of the citizens in the process," says Shaw.

He is expected to lead the challenge against proposed changes to the Money Laundering Act, which he believes will give the minister unprecedented powers to acquire information on people's finances, including the right to, "violate the secrecy laws without any reference to the courts which is the only saving grace between individuals, companies and the overwhelming power of the state".

Shaw is being supported in Parliament by his party's junior spokesman on national security Clive Mullings. Mullings has argued that having amended the Financial Services Commission Act to allow for the minister to seek disclosure of confidential and secret information to whosoever he designates under the Money Laundering Act, the minister is now attempting to amend the Money Laundering Act to use it as a support mechanism to create an "all powerful" portfolio.

The bill, Mullings added, would remove the Director of Public Prosecutions (DPP) as designated authority and replace him with "a designated non-financial institution" or, in other words, a person or entity not primarily engaged in the financial business or designated as a non-financial institution for the purposes of the Act by ministerial order, subject to affirmation by the House.

This, he added, would pave the way for the new Department of Government called the Financial Investigations Division (FID).

"Therefore, in one fell swoop," Mullings told Parliament, "the minister is seeking to take away the investigative power of the constitutionally recognised DPP, giving it to an agent of the state. In order to now open the entire financial system to this new creature of statute, known as the FID, the provision of trust services, the remittance companies and the money transfer agents and agencies will now come under the purview of this creature."

He said that the existing Money Laundering Act placed a duty on financial institutions to report to the designated authority cash transactions involving the prescribed amount (US$8,000 for persons licensed under the Bank of Jamaica Act and US$50,000 for financial institutions) carried out by any person with that financial institution. However, the new Bill would not only reduce the prescribed amount to US$5,000 and US$15,000, respectively, but would mandate the institution to report "suspicious transactions" as directed by the FID.

"This is a very wide, unprecedented and unconstitutional power outside of any judicial control or scrutiny. This must not stand," Mullings said, as he likened the action to "Big Brother" and "1984".

It was also Mullings who first highlighted the issue of section 10 of the Money Laundering Bill, which deals with the production of orders. And he pointed out that lawyers could be forced to run the risk of breaching the rule of legal professional privilege by the FID in the discussions in the House of Representatives.

Solicitor General Michael Hylton, in his speech to the Rotary Club of St Andrew on Tuesday, took the threat to professional privilege to another level when he explained that in addition to the financial institutions, accountants, real estate agents and major car dealers could be forced to report these "suspicious transactions" under the proposed amendments.

The situation has been further aggravated by the fact that spokesmen for the professional bodies have said that the Ministry of Finance had no prior discussions with them before the Bill was drafted or tabled in Parliament.

According to Bar Association president Arlene Harrison-Henry, she only got a copy of the Bill on Wednesday after reading Hylton's speech. She was therefore in no position to comment in detail on the Bill, she said, adding that the association would form a small committee to review the document and make a submission to the JSC.

But, she added, she would have some concerns about the "suspicious transactions" proposal.

"It means that all of us would have to be working in a sort of police capacity," she said. "And we need to look at how it will affect lawyer-client confidentiality."

"Out feedback was not sought," said Institute of Chartered Accountants of Jamaica (ICAJ) president Linroy Marshall. "From time immemorial, the relationship between accountant and client has been marked by confidentiality and any proposal to change that would be of some concern to us. But we were not involved in the early process and I don't know why that was the case."

Kenneth Shaw, the president of the Jamaica Used Car Dealers Association (JUDA), said that he had not been aware of the Bill until Hylton's Rotary speech.

"We are willing to cooperate with whatever regulative system the government puts in place, but we really expected that in a matter of this nature we would have been consulted prior to the drafting of a bill," he said.

In explaining to the House the reasons for the new money laundering strategy, Dr Davies said that they have become necessary due to the changes in the international financial system.

"More recently, the issue of money laundering has received greater international recognition, with the need for appropriate legislation to counter this problem," he said.

The Bills represented the work of the Legislative Task Force on Financial Crimes, which was established to recommend changes to improve the fight against money laundering, the finance minister said.

"Effective monitoring and regulation is only as good as the quality of the information on which decisions are based. As is evident from the Bills tabled, covering all the various financial entities, the exchange of data barrier will now be overcome," Davies said.

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