THE Senate on Friday passed amendments to the Companies Act to strengthen Jamaica’s anti-money laundering and combating financing of terrorism (AML/CFT) framework, to stave off the threat the country faces of being blacklisted if it fails to beef up these guardrails to meet international obligations.

Stressing the importance of passing the legislation now, Leader of Government Business in the Upper House, Senator Kamina Johnson Smith pointed out that not only the Government, but businesses and individuals could, for example, be blocked from online transactions if Jamaica remains grey-listed by global money laundering and terrorist financing watchdog Financial Action Task Force (FATF), and on its heightened monitoring programme.

The country was put under increased monitoring in February 2020, with 40 action items based on FATF recommendations. Up to October Jamaica was largely compliant with 27 of these recommendations. Among the laundry list of actions that must be taken are amendments to the Companies Act to improve the beneficial ownership regime; finalisation of charities regulations; and bringing all designated non-financial businesses and professions into the AML/CFT regime.

Johnson told the Senate that Jamaica is in imminent danger of being blacklisted by the FATF.

“This is a status that would seriously affect our ability to do business. It would affect not only government, it would affect business, it would affect individuals… it would say our systems are not sufficiently robust in terms of their prevention of anti-money laundering and the financing of terrorism, and therefore they need to close down systems, or implement counter measures. Imagine you’re trying to use your credit card on Amazon, or another site, to purchase something which you cannot obtain here, and being told that your credit card is not recognised because it is a Jamaican credit card; that is the level to which we would be placing our country at risk,” she explained.

Pointing out that Jamaica had lost time due to the COVID-19 pandemic, she said that after being referred to the FATF heightened monitoring programme and placed there, significant progress has been made, but the country still had not attained a satisfactory level of in its AML/CFT framework.

Johnson Smith explained that although the Companies Act was amended in 2017 to introduce the provision for information on beneficial owners, those amendments have some shortcomings.

An assessment of the amendments determined that not all legal persons are required to maintain current and accurate information on their directors, shareholders, and beneficial owners. Furthermore, there is no active monitoring by competent authorities to ensure that basic beneficial ownership information is current for all legal persons and arrangements, which means competent authorities cannot be certain that the information provided is accurate and up to date.

Additionally, Johnson Smith said, there are no appropriate provisions to ensure that effective, proportionate, and dissuasive sanctions are applied against companies that are not compliant with filing and record-keeping requirements, or obligations to update beneficial ownership information.

“So the requirements are there, but they have no guardrails and no penalties to ensure that they are enforced,” the foreign affairs minister pointed out.

She stressed that the amendment will address three of the core (risk-based assessment) remaining actions on Jamaica’s action plan agreed with FATF.

The Bill seeks to ensure that the Companies Act conforms with the FATF standards relating to beneficial ownership of companies, the control threshold for which has changed from 50 per cent ownership to 20 per cent. It will also empower the registrar with regulatory oversight to verify beneficial ownership for companies; provide for mutual exchange of information between the registrar, competent authorities and law enforcement, including international authorities; and provide effective and proportionate sanctions for non-compliance in relation to obligations to declare beneficial ownership.

Johnson Smith said the Companies Office of Jamaica has set up a new money-laundering unit to beef up its implementation capacity, in anticipation of the expanded legal framework.

Opposition Senator Janice Allen said the Opposition supports the Bill, but cautioned against making the requirements for compliance burdensome for small firms.

“Now that we are making further changes that have significant repercussions to companies of any size, who are trying their best to comply, we have to help them to comply. As such, we can’t make it too onerous nor should we give them insufficient time to make the amendments in their organisations so that they can comply,” she said, pointing out that the requisite support and structures must be in place to facilitate compliance.

Colleague Senator Donna Scott Mottley also warned against rushing to meet timelines, and the risk of passing legislation with deficiencies.

“We are going to support it because we recognise the importance of it. We’re just asking, if it’s at all possible, give us some more time so that we can diligently apply ourselves to the task that we are here to do,” she urged.

Among the new provisions in the Bill is for an agent of a company — which keeps the register on behalf of the company — to be held liable to the same penalties as members of the company if the agent fails to comply with beneficial ownership requirements, such as submission of returns and other information. The Bill also upgrades the fine for refusing to allow inspection of a company register from a maximum of $50,000 to $1 million.

The 39-clause Bill was passed in the Lower House on Tuesday.