JAMAICA failed in the quest to be removed from the dreaded “grey list” of the Financial Action Task Force (FATF), in the entity’s latest review of measures the country has taken to deal with risks relating to money laundering and terrorist financing. There is, however, optimism that the country could finally get a better review when the FATF next meets in February.

Finance Minister Dr Nigel Clarke had announced in prior interviews that he was confident Jamaica would have met the FATF’s deadline for October. This would have left Jamaica in a position to apply for consideration of an on-site examination, and to be removed in the subsequent FATF plenary session.

However, this did not happen during the FATF’s three-day plenary session overseen by President T Raja Kumar and over 200 delegates who voted on a number of decisions from its headquarters in Paris, France. In its outcomes for jurisdictions under increased monitoring (grey list), it noted that Jamaica has taken significant steps towards ensuring adequate, risk-based supervision in all its DNFBP (designated non-financial businesses and professions) sectors. Jamaica was added to the grey list in February 2020, with the action plan expiring in January 2022. Countries on the FATF’s grey list are deemed to be actively working with the entity to address strategic deficiencies in their regimes so as to counter money laundering and terrorist financing.

“Jamaica should continue to work on implementing its action plan to address its strategic deficiencies by demonstrating that accurate and up to date basic and beneficial ownership information is available on a timely basis to competent authorities, and effective, proportionate, and dissuasive sanctions are applied,” stated the FATF document released on Friday.

With the country remaining under heightened surveillance for money laundering and terrorism financing the FATF has once again issued a warning — for the third-consecutive time — for the authorities to swiftly demonstrate significant progress by the next plenary session between February 19-23, 2024. Otherwise, it has threatened to “consider next steps, which could include calling on its members and urging all jurisdictions to apply enhanced due diligence to business relations and transactions with Jamaica”.

If the FATF members follow through on such a recommendation then the economic consequences could be significant as this could likely discourage investment and trade with Jamaica. In addition, foreign regulators could impose restrictions on their banks’ transactions with Jamaican banks, further hindering business and foreign investment. Moreover, the increased due diligence required by international counterparts when dealing with Jamaican entities may lead to higher transaction costs, making it more expensive to do business in the country and discouraging foreign investors from investing in the economy.

Jurisdictions subject to a call for action (black list) are those with which the FATF encourages its members to apply enhanced due diligence in business relations and transactions, due to strategic deficiencies in their AML/CFT regime. If Jamaica was to be included on the black list, business would become a lot more difficult for the ordinary Jamaican whose financial transactions could be blocked by other countries.

The Jamaica Observer reached out to Finance Minister Dr Nigel Clarke about the issue and he highlighted that the Companies Office of Jamaica (COJ) was implementing the recent legal amendments surrounding beneficial ownership. These included applying the relevant sanctions for non-provision of timely and accurate beneficial ownership information and ensuring competent authorities have access to information in the beneficial ownership registry. Sunday Finance understands that the country has only one issue about which FATF needs to be satisfied, and that is to prove that the law passed in March requiring the filing of information on beneficial owners of non-financial businesses and professions works as envisioned.

“The COJ is well advanced in addressing the last action items. When those two items are completed, Jamaica will have addressed or largely addressed all thirteen (13) action items agreed in its Action Plan with the FATF. Once the last items is accepted by the FATF as addressed or largely addressed, the next step would be for the FATF to schedule an on-site visit to Jamaica to verify the sustainability of the measures Jamaica would have implemented to address the strategic AML/CFT deficiencies identified in its 2020 Action Plan and show that the implementation is ongoing and that there is the necessary political commitment.The Government remains fully committed to ensuring that the remaining two action items are completed before FATF’s next plenary cycle in February 2024. ,” the Finance Minister added in his statement regarding the plan of action going forward.

Jamaica recently established a beneficial ownership registry and has made significant changes at Companies Office of Jamaica to prevent legal persons and arrangements from being misused for nefarious purposes. It also finalised new charities regulations, and brought several DNFBPs under the AML/CFT framework.

The FATF is an intergovernmental organisation aimed at combating money laundering and terrorism financing. Jurisdictions under increased monitoring are described as being on the “grey list” while others on a subject to a call for action are placed on the “black list”. There are currently 23 jurisdictions on the grey list and three on the black list.

Bulgaria was added to the grey list while Albania, the Cayman Islands, Jordan, and Panama were removed from the list following successful on-site examinations by the FATF. The Cayman Islands was added to the list in February 2021 and received the green light at the June plenary for an on-site examination. Haiti is the other notable Caribbean country which is on the grey list.

Barbados has substantially completed its action plan to the extent that the FATF noted this warrants an on-site assessment to verify implementation of the AML/CFT reforms has begun, is being sustained, and that the necessary political commitment is in place. Some of the key reforms noted included conducting risk-based supervision of financial institutions and applying sanctions as appropriate; ensuring that accurate and up to date beneficial ownership information is available on a timely basis; improving and enhancing the use of financial intelligence; pursuing repatriation and sharing of confiscated assets with other countries.

Gibraltar, Uganda, The United Arab Emirates, Syria and Yemen have also been given the green light by FATF on the substantial completion of their action plans, which warrants on-site examinations. However, Yemen and Syria’s on-site examinations have been delayed due to the security situation in both countries, and will therefore be conducted at the earliest possible dates, once things stabilise.