Bank of Jamaica / The Federal Reserve System
ANTI-MONEY LAUNDERING EXAMINATION SEMINAR
25-29 October 2004
Opening Remarks
Audrey E. Anderson
Deputy Governor
Financial Institutions Supervisory Division
Good morning ladies and gentlemen. On behalf of the Governor and entire management
of the Central Bank, I take pleasure in welcoming you to the Bank of Jamaica, and to this
seminar on “Anti-Money Laundering Examination”.
I would wish to extend a warm Jamaican welcome to our visitors from overseas,
especially to Ms. Kathryn Hinton and Mr. Rudy Zepeda, our two presenters from the
Federal Reserve System who, during the next few days, will be sharing with us,
examination techniques used in the US jurisdiction in reviewing this non-traditional but
increasingly critical area of bank supervision. As several of you know, Rudy is now in
the category of being an old and valued friend to us in Jamaica and the Caribbean and
I’m sure that Kathryn will be there too by the end of this programme. To our supervisory
colleagues from across the Caribbean, I say a special welcome and trust that that the
transmission of the Fed’s examination approach will inform enhancements in our
supervisory approaches and also serve to hone our supervisory skills as collectively we
strive to promote prudent anti-money laundering (AML) practices within our banking and
financial systems.
1
The Bank of Jamaica and indeed the entire Caribbean Group, takes very seriously the
threats posed by money laundering to our financial systems. This reputed billion dollar
illegal activity has the power not only to undermine the integrity of financial entities, but
also to corrupt legitimate industries, threaten the political stability of states and societies
and damage the reputation of companies and indeed entire nation.
Given our unique relationship with financial institutions, we, as supervisors, have a
critical role to play in mitigating the risks of money laundering to our countries.
Our
financial institutions are potential vehicles for the cleansing of ill-gotten gains, and it is
important that we not only promote the development and application of sound AML
measures in our banking systems, but also review the effectiveness of such measures and
require implementation of more vigorous systems where necessary.
It therefore means that our supervisory or regulatory agencies must have a
cadre of
professionals sufficiently skilled in AML examinations in order to identify frailties in
bank’s internal and operating systems that may expose them to undue risk of money
laundering.
I must interject here, that although this seminar’s critical focus is ‘Anti-Money
Laundering Examinations’, the related threat of terrorism financing cannot be ignored,
especially in the context of 9/11.
Financial institutions worldwide are potential funnels
for terrorism funding and as such the construct of any comprehensive examination
framework and practice must seek to simultaneously tackle the dual threats posed by both
2
types of activities… and I note from the Agenda that a session has been quite
appropriately devoted to this related topic.
However, the best examination practices need to be supported within a robust and
comprehensive legislative framework which goes beyond merely criminalizing the acts of
money laundering and terrorism financing, to imposing responsibility on all potential
conduits for money laundering and terrorist funding to adopting appropriate risk
mitigating practices, and to establishing effective machinery for monitoring adherence to
legal and prudential requirements.
Very importantly, the legislative framework must empower supervisors to require
effective AML measures of their constituents and further provide the supervisors with the
necessary authority to apply sanctions for failure to adhere to sound AML practices.
Fundamental in any structured and cohesive counter attack to these twin threats, is the
ability for responsible authorities to share intelligence not only with other national
agencies inclusive of law enforcement authorities, but also with external supervisory and
regulatory authorities. An effective legislative framework therefore needs to provide
Supervisors
with
adequate
authority for
information
sharing
under
specific
circumstances, and with agreed safeguards for the use and confidentiality of information
so shared.
3
I am aware, that in the face of these challenges, intensive work has taken place across the
Caribbean, and is continuing, to strengthen our legislative framework and implement
effective anti-money laundering programmes consistent with international best practice.
In fact, the inclusion of this programme in our schedule of 2004 regional training events
is just one aspect of these initiatives on the part of the Caribbean Group of Banking
Supervisors. I should also make the point that as a result of the massive effort and
significant resources expended by our various governments in upgrading our laws and
regulatory structures in this area, no Caribbean country now remains on the FATF so
called ‘black list’ of Non-Cooperative Countries and Territories (NCCT). In fact, no
member of the wider Caribbean Financial Action Task Force (CFATF) [which includes
the Caribbean and Central America] now remain on that list. The last CFATF member to
exit that list was Guatemala as of early 2004.
As bank regulators we now have an important ‘follow up’ role to play in making our
systems as non-user-friendly as possible to all those who would subvert them to cleanse
their “dirty” money.
Here at the Bank of Jamaica, in recognition of the role of supervisors in developing and
implementing an effective counter attack to these twin threats, we have, since the late
1980s, issued ‘Anti-Money Laundering Guidance Notes’ to our supervised institutions
which were again upgraded in 1999.
This coincided with enhancements to our on-site
review programme to test licensees’ compliance with existing laws, regulations,
4
regulatory guidelines and internationally recognized anti-money laundering standards and
methodologies.
Earlier this year, in mid 2004, the Bank of Jamaica issued to its supervised licensees a
comprehensively upgraded Guidance Note and Best Practice Standard, incorporating the
‘Eight Special Recommendations’ on Terrorist Financing, and the newly revised ‘Forty
Recommendations on Money Laundering’ issued by the Financial Action Task Force
(FATF). The BOJ Standards also give recognition to the Best Practice Standards for
Customer Due Diligence Procedures issued by the Basel Committee on Banking
Supervision. Consequently, the Bank of Jamaica’s examination methodology has been
upgraded to incorporate all the recent enhancements to international best practice and
allows for an increased scope for the onsite review of the AML/CFT framework existing
within the licensed financial institutions. There is also a special focus on AML reviews of
entities like cambios and remittance companies which have now been brought within the
Central Bank’s regulatory ambit.
Consistent with the United Nations Security Council Resolution 1373, the Bank of
Jamaica also actively participates in national efforts to ensure that Jamaican financial
intermediaries are not being used as conduits for the funding of terrorists and terrorist
groups. The Central Bank also chairs a Financial Crimes Legislative Task Force which
has been charged with the responsibility of making proposals to Cabinet for needed
amendment and/or enactment of legislation covering all facets of financial crime
inclusive of money laundering, terrorism financing, and related issues.
5
As recently as two weeks ago, the Lower House of Parliament approved amendments to
financial legislation, which will extend the information sharing capabilities of our
Regulators. And we expect this type of legislative upgrading to be a continuous process
across the region.
In closing, it cannot be stressed too often, the importance of partnership among relevant
authorities in resisting the threat of money laundering and terrorism financing to our
financial systems.
Let me once again express our thanks to the Board of Governors of the Federal Reserve
System for being ever ready and willing to facilitate training in the Caribbean region. I
am confident that this seminar will energize and better equip our participants to undertake
the very material responsibilities that have been reposed in them.
For all our overseas
visitors, I do hope that you will find time to enjoy the cultural and culinary delights of our
island before your return home to the demanding task of preserving the integrity of our
financial systems.
Thank you.
6