Home' Trinidad and Tobago Guardian : June 8th 2014 Contents JUNE 8 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
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tional trade eventually suffer from reduced
access to the world markets as well as the
increased financial burden when the added cost
the international bank incurs trickles down to
As mentioned, the FIU has done its part in
setting up the necessary administrative structure.
However, the FIUTT s approach is administrative
in nature while the US Department of State s
assessment has a more nuanced approach that
is enforcement-driven and based on intelligence
from operatives. As such, considerable weigh
must be given to their report.
As a background on how the anti-money
laundering monitoring and enforcement process
works in T&T, the FIUTT receives suspicious
transaction reports (STRs) and suspicious activity
reports (SARs) from financial institutions and
listed businesses. Those reports are analysed
then the SARs are sent to the appropriate law
enforcement agency if further follow-up inves-
tigation is warranted.
The law enforcement agencies then proceed
to conduct their investigations. Once enough
evidence is gathered, the applicable enforcement
agency sends their files to the Director of Public
Prosecution (DPP) to be advised whether the
perpetrator(s) should be charged for money
laundering. According to the FIUTT s latest
annual report, as of September 31, 2013, 99
SARs were sent to the various law enforcement
agencies to be investigated.
With such a structured anti-money laun-
dering administrative process in place, and 99
STRs under investigation by law enforcement
agencies in T&T, one might ask, why is it that
hardly anyone has been arrested and charged
for money laundering since the enactment of
the Proceeds of Crime Act, 2000?
The thought that immediately comes to the
average person s mind is that the law enforce-
ment agencies are not doing their jobs. As a
matter of fact, based on views expressed in the
news media and in a few social media circles,
most people believe that the law enforcement
agencies are the ones who are responsible for
the present lack of prosecution for money laun-
dering in T&T.
It so happens that this notion is a fallacy.
The stark reality is, due to the deficient wording
of the Proceeds of Crime Act, 2000, law
enforcement agencies and the DPP do not
anticipate successfully prosecuting and securing
a conviction against a violator for money laun-
dering as there is a predicate offence that has
to be proven before an offender can be charged
and successfully convicted for money launder-
ing.A predicate offense is the offense that under-
lies the money laundering activity. It is the
crime from which the illegal proceeds were
derived. Based on the wording of the act, proving
the elements of this predicate offense and secur-
ing a conviction is difficult.
Deficiency in law
What happened is at the time the Proceeds
of Crime Act, 2000 was passed, the country
needed to have anti-money laundering legis-
lation enacted quickly to demonstrate compli-
ance with FATF requirements, and to avoid
At that time the focus was more on having
a law passed in Parliament; not necessarily a
properly drafted law. Now that the FATF require-
ment is met and it is time to prosecute money
launderers, we are faced with a dilemma where
we have a law that makes it difficult for the
law enforcement agencies to secure a conviction
in court. In essence, the Proceeds of Crime
Act, 2000 in its present form is merely a paper
tiger; no more intimidating than the stationery
it is written on.
Under the laws of evidence, for every crime
that is committed, there are elements or ingre-
dients that must be present before a suspect
can be charged, brought before the court, and
convicted. As such, a smart prosecutor would
not likely take a matter to trial that has missing
elements and expect to secure a conviction.
This is the reason why there have not been
many money laundering prosecutions in T&T.
Based on the deficiency in the wording of the
current law, it would be a complete waste of
time and public resources for the DPP to attempt
to successfully prosecute anyone under the cur-
Sections 43 through 46 of the Proceeds of
Crime Act, 2000 outline what constitutes
money laundering. For the sake of brevity, I
would just summarise what the law says since
the wording is quite voluminous.
In essence, a person is guilty of money laun-
dering if that person knows or has reasonable
grounds to know that money or property were
derived from drug trafficking or a "specified
offence", and that person conceals, disposes,
disguises, transfers, removes from or brings
into T&T, or converts that money or property.
For the purposes of this act, a "specified offence"
means either an indictable offence, income
derived from corporate tax fraud, VAT-related
offences, or copyrights infringements.
The unique problem with laying a charge of
money laundering based on the current wording
of the act is that the money laundering offense
is preceded by a predicate offense that must
be proven in order for a money laundering
charge to be laid. In other words, an offense
was committed that caused the offender to
receive illegal money (Offense # 1). The offender
then tried to clean the illegal money received
from Offense # 1 to make it look like it came
from a legitimate source (Offense # 2).
The way the Proceeds of Crime Act, 2000
is written, the elements of Offense # 1 must
be established before a person is convicted for
Offense # 2. Bear in mind that the suspicious
transaction reports and suspicious activity
reports the law enforcement agencies receive
from the FIUTT may have been received months
or years after Offense # 1 occurred. This means
that the law enforcement agencies would have
to conduct retrospective investigations to figure
out what offense may have been committed
that gave rise to the illicit money, when the
offense took place, and where the offense took
The act works for the rare instance when
there is a cut-and-dry money laundering case
where an offender commits a criminal act,
obtains illicit proceeds, and is charged before
the court for that offence.
Once it is determined by investigators that
the proceeds were subsequently laundered, the
accused can now be charged for money laun-
dering since the initial charge (for which the
facts are known) is now a predicate offense.
However, bear in mind that the majority of
money laundering investigations law enforce-
ment agencies would be conducting would be
based on SARs received from the FIU where
the predicate offense is unknown; therefore the
Act would not be effective for those instances.
For example, John Doe accumulates $500,000
from drug dealings he engaged in over several
months and decides to clean it by buying a
$500,000 single premium life insurance policy
from XYZ life insurance company paying the
entire premium upfront in cash.
Let s assume this policy has a "free-look
period" feature that allows John Doe for a short
period of time after the policy is signed and
the premium is paid to cancel the policy without
paying a penalty. If one week after purchasing
the insurance policy, John Doe changes his mind
and decides to cancel the policy, John Doe
would receive a sanitised check for $500,000
from XYZ life insurance company which he
would most likely deposit into his bank account
at ABC commercial bank.
Let s suppose XYZ life insurance company
files a suspicious activity report with the FIUTT
and this report is subsequently sent to a law
enforcement agencies. The agency is faced with
The money-trail from the point where John
Doe paid XYZ life insurance company the pre-
mium in cash to the point when he deposited
the refund cheque from XYZ life insurance
company into his account at ABC commercial
bank is easy to trace, document, and present
in court as evidence.
However, based on the present language in
the Proceeds of Crime Act, 2000, to prove the
predicate offense (Offense # 1) that gave rise
to the $500,000, the law enforcement agency
will have to figure out the exact date(s) the drug
dealing(s) took place, where the drug dealing(s)
took place, and what types (and quantities) of
drugs were sold.
Therefore, if the elements to prove the pred-
icate offense cannot be established, it would
be an exercise in futility for a prosecutor to
advise a law enforcement agencies to lay money
laundering charges with the expectation of
securing a conviction.
When the T&T Proceeds of Crime Act, 2000
is compared to the Proceeds of Crime Act 2002
in the United Kingdom (UK), and the Money
Laundering Control Act of 1986 in the United
States (US), the deficient wording of T&T s law
re the predicate offense is proven becomes
immediately evident. It also shows why the
rates of prosecution and conviction for money
laundering in the UK and US are significantly
higher than T&T.
One point to note is that both the UK and
US previously faced the same problem T&T is
currently facing. However, they remedied this
situation by recognising the problem and proac-
tively implemented a solution by amending
their laws to make the crime of money laun-
dering a standalone offense. Therefore, it is
crucial that our lawmakers now focus on sub-
stance over form by revisiting the Proceeds of
Crime Act, 2000 and making the necessary
amendment(s) so that law enforcement agencies
and the DPP office will be more empowered
to prosecute money launderers.
Low conviction rate
In view of the deficiency in the language of
the Proceeds of Crime Act, 2000 outlined
above, a greater urgency must be placed on
presenting the act in Parliament for amendment.
Time is ticking away on T&T as we face the
4th Round of the FATF mutual evaluation
process in January of 2015 with an abysmally
low money laundering conviction rate that will
definitely work adversely against us.
Added to that, the schedule of bills to be
debated before the current Parliamentary session
that commences on August 1, 2014 does not
include any debate related to anti-money laun-
The Government has the power to decide
what Bills are introduced in Parliament for
debate; therefore, it is their call to determine
whether the country continues on the present
path that is mined with reputation and economic
risks, or a path to progress. With general elec-
tions due in 2015, it would be interesting to see
While being critical of a deficiency, it is only
fair that solutions be offered. First, Parliament
must adjust its schedule so that there is a debate
to amend the Proceeds of Crime Act, 2000 as
soon as possible.
Most important, it is imperative that an addi-
tional prison facility be built in T&T to accom-
modate people who are convicted of non-violent
crimes so that they would not have to share
space with violent offenders when they are
serving their prison sentences.
My humble view is because of our very close-
knit, nurturing, and laid-back culture, there is
some hesitancy and lack of will to jail white-
collar criminals; especially when they are of a
high socio-economic standing.
Historically, the few people in T&T belonging
to the high socio-economic bracket who have
had to spend some time in prison spent that
time in the prison s infirmary for their personal
safety and security.
Therefore, while sharpening the teeth of the
law, and empowering law enforcement agencies
and the DPP to increase conviction rates, having
the appropriate prison facility for non-violent
offenders should be considered.
It would be very naïve of us to believe that
if a prominent and respected business executive
or Member of Parliament was convicted of
laundering money, that person would spend
their time among the hardened criminal ele-
ments in general population in prison.
In a nutshell, if the law-makers in the country
want to genuinely demonstrate that they have
the political will to fight money laundering, the
two recommendations above would be good
starting action points that would be the genesis
to reduce a lot of crime that is currently occur-
As a matter of fact, it would be very difficult
for critical thinking individuals to take any
efforts to amend the Proceeds of Crimes Act,
2000 seriously if there is no simultaneous dis-
cussion about adding prison facilities to accom-
modate those whose criminal activity were not
deterred by the amended law.
In concluding, T&T lawmakers need to
understand that we cannot afford to continue
to operate in a reactive mode. A few months
ago it took the seizure of narcotics in a foreign
country that was transshipped from our shores
for us to wake out of our sleep and realise how
porous our shores are.
Hopefully, that incident woke us up and
made us realise that we need to start protecting
our country s image and reputation by ensuring
that illegal products do not enter and leave our
Let us hope that it does not have to take an
internationally publicised money laundering
sting with links to T&T to get us into a proactive
mode to deter money laundering activities.
Malcolm Jack is a certified public account-
ant, certified fraud examiner, certified anti-
money laundering specialist, and adjunct col-
Proactive approach will prevent crime
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