The Cayman Islands are no stranger to chairing the CFATF (the Caribbean offshoot of the Financial Action Task Force, charged with combating money laundering and the financing of terrorism), having led the charge in 1999. Member countries take turns in chairing the organisation annually and now, the second time around for Cayman, the organisation finds itself facing a series of challenges, not least with criticisms emanating from the President of the Financial Action Task Force, Luis Urrutia Corral. Corral recently stated that the FATF worried about the CFATF’s relationship with the FATF, and its budgets and financial audits which he said, lacked transparency and consistency, calling it “a serious concern to the FATF”.
Commitment is key
Getting buy-in from all 30 member countries is not an easy task, as Bulgin confirms: “Some member countries are not engaged as they ought to be. I don’t believe this is deliberate; rather it is because of a confluence of issues – scarce resources and competing priorities for countries,” he states.
“St Lucia and St Vincent, for example, have recently been struck by adverse weather conditions and Haiti has had to deal with its earthquake, cholera outbreak and now flooding.”
Bulgin says it is difficult to convince people in such circumstances to prioritise CFATF matters as opposed to blankets and medicine; never-the-less he says it’s important to find a way to convince them to give it importance within the constraints of their existing difficulties.
There are certain countries, however, which still do not see the relevance of being part of the CFATF, especially when they do not have a financial services industry themselves.
“These countries struggle to see the relevance of being part of an organisation which fights money laundering,” he says. “What they need to appreciate is that even if they only have three banks they are at risk. And money laundering does not just take place within the financial services industry – precious metal and jewellery dealers, real estate agents and so on are also at risk.”
Reduced funds hamper effectiveness
Bulgin estimates that up to 30 per cent of member countries have not paid all their dues to the CFATF, which has a huge knock-on detrimental effect.
The organisation’s executive director, Calvin Wilson, is based in Trinidad. He and his staff of eight are what the Attorney General terms the “nerve centre” of the organisation, taking part in vital plenary meetings with the FATF in Paris as well as organising typologies (workshops that keep members up-to-date with emerging trends and issues such as human trafficking, cyber crime, drug and gun running.) Without all membership dues such activities are severely hampered.
Furthermore, getting all members fully committed to the CFATF provides a unified front among a large representation of the region, thereby giving it the teeth to speak with one voice.
“If some members don’t quite grasp the importance of a fully committed organisation it generally reflects badly on the rest of us,” Bulgin comments.
“Countries need to appreciate that money laundering is live and that reputational risk is real if the industry were to be contaminated by money laundering,” the Attorney General says.
“It is therefore very important that CFATF member countries continue to exercise vigilance.”
Peer reviews or mutual evaluation reports are a vital means by which members can ensure their adherence to the FATF’s 40 + 9 recommendations for countries to combat money laundering, the standard against which such assessments are measured. Assessed in such areas as legal, law enforcement and financial, countries are looking at the fourth round of evaluations in 2012.
“We anticipate that the FATF will strive, for the first time, to make tax offences predicate offences, which will change the goal posts,” Bulgin says.
Thus anyone prosecuted for evading taxes will also have the proceeds of crime subject to forfeiture, an added legislative and administrative burden for member countries, particularly those countries with little resources to accommodate such changes.
“Technical assistance by COSUN (Co-operating and Supporting Nations, such as the UK, US and France) is vitally important because it helps hone the skills of examiners in peer reviews as well as personnel working in financial reporting units, who are on the front line receiving suspicious activity reports,” Bulgin says.
“Such entities need to remain contemporary and cognisant of evolving standards as we continue to strive to upgrade the knowledge base of member countries. We depend on COSUN countries quite heavily in this respect and they have been quite generous in their support. We look forward to continuing and strengthening this relationship.”
Starting at the top
During his tenure as chairman, Bulgin says he will be robust in ensuring that all see the relevance of being part of a strong CFATF.
Bulgin says he will work hard to get buy-in at the highest level:
“I have requested the Secretariat arrange interface with prime ministers and other leaders at the next Caricom summit. I intend to get political commitment at that level to ensure that the organisation has as much commitment from its members as it did back in the 1990s.”
Bulgin says he anticipates a meeting of the steering committee in the near future to prioritise those issues which need to be dealt with in the short, medium and long term. The meeting will allow for the requisite “corrective surgery” needed to progress further, he says.
In answer to Corral’s criticism of the CFATF’s budget system, Bulgin concedes that most of his criticisms are valid and he will be actively seeking to redress the situation. With regard to the transparency of the CFATF’s budget, Bulgin says the majority of funds have been spent on translating large documents into Spanish, to accommodate Spanish speaking members. “I have requested that such expenses be made available on the internet to make the reporting transparent. Member countries have a right to know where their dues are being spent,” he confirms.
Going forward, Bulgin says it is important that the CFATF “recast and refocus”.
“I want to raise the profile of the CFATF during our time as chair. Notwithstanding the challenges we face, I’m convinced we will get the necessary commitment among member countries and that they will continue to support this important organisation.”