| Interview: KOSI LATU, Co-ordinator Pacific Anti-money Laundering Project |
Effective Legislation To Counter Money Laundering
Dionisia Tabureguci
Pacific islands countries have, at their Disposal, a number of donor agencies and institutions that can assist them in the establishment or enhancement of their anti-money laundering (AML) and counter terrorist financing (CTF) legislations.
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Kosi Latu...“We’ve made some good progress on the ground.”
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One such effort is the Pacific Anti-Money Laundering Project (PALP), a combined effort between the Pacific Islands Forum Secretariat (PIFS) and the US State Department. ISLANDS BUSINESS magazine’s DIONISIA TABUREGUCI spoke to Kosi Latu, head of the Pacific Islands Forum Secretariat-based PALP about the project’s progress.
What has been the progress of PALP’s work so far?
“We have already made some very good on progress on the ground. We have four full time country projects, where we are providing both law enforcement and legal assistance. Those four countries are Tonga, Vanuatu, Palau and the Marshall Islands, which is a new project. We had a request from Fiji, which we’re assessing. We haven’t really done anything in terms of putting into action any measure to implement that project because we are waiting for information to come back from the Fijian authorities before we can move forward. So we have these four projects in those four countries plus a new one from Fiji. In addition to that, we have another four or five countries that we’ve identified, where we could also possibly extend our programme. And we have specific areas where we know help can be provided to these countries. So in terms of progress, I think overall, one can say PALP has made a steady and good progress in the last seven months.”
What is the situation with Forum island countries, in terms of anti-money laundering and terrorist financing legislations? And whom do we benchmark our status against?
“Your question poses a number of different issues. You’ve mentioned the word “benchmark”. Well, there are the benchmarks that are developed and established internationally and are recognised internationally for countries to comply with. The international standards, in terms of money laundering and terrorist financing, are actually developed by the Financial Action Task Force, which is an international organisation based in France. It develops international standards with the view that they would help countries take actions to remove certain weaknesses or remove certain vulnerabilities in their anti-money laundering and counter terrorist regime. If countries put into place the right mechanisms and appropriate measures, these standards cover a whole range of areas. We don’t have time to discuss all of that but I can say by way of overview that the standards cover legal, the regulatory, financial and the law enforcement sectors. So in terms of legal measures, for example, countries are expected to put in place legislations that, in the first instance, should criminalise money-laundering and terrorist financing, and also define what money laundering is. In some cases, countries are not able to prosecute effectively because the legislation does not provide effectively for the criminalising of money laundering and therefore, there is no sound legal basis for them to prosecute successfully. So I guess the first step that countries need to do in terms of legislation is to make sure that the legislation provides them with the ability to criminalise money laundering and financing terrorist and also provide them with the ability to prosecute successfully. This is not only the case in the Pacific. Most countries have legislations, some probably much stronger than others. But you can have all the best legislations in the world, yet if you don’t enforce them, they will mean nothing. The issue here therefore is not so much about putting legislations on the books. It’s what you do with the legislations that I believe is the key measure for whether a country is successful or not. A country may be said to have a strong anti-money laundering and counter terrorist financing regime depending on whether they’re actually implementing those legislations and not just saying: ‘well, here’s a piece of legislation’. I think there is a certain temptation there for countries to just show a whole list of legislations being enacted and passed. But then the issue is: ‘Is it being used effectively?’ And that, I believe is the key question, not just for Pacific islands countries but for all countries when you look at combating money-laundering and countering terrorist financing.”
Have Pacific islands countries reached that stage of criminalising money laundering and terrorist financing?
“Well, it varies from jurisdiction to jurisdiction. Most countries in the Pacific now have that but there are still some weaknesses where certain offences are not defined as being predicate offences for money laundering. It’s very important that the legislation doesn’t just criminalise money laundering but that it is able to have a much wider, broader coverage. At the moment, the international standard is that all serious crimes must be predicate offences for money laundering. And some countries need to step up to that mark. So, you know, it is not a matter of us just saying: ‘we hereby are defining money laundering as such and such’. Money laundering is proceeds of crime and the issue is, what offences must be covered under money laundering? And the international standards say, at the most, that it’s all serious crimes. So there’s a lot of awareness that need to be done. I also mentioned the ability of countries to also prosecute effectively. Well, a whole draft of measures is needed in order to get there. First of all, you need to make sure that your law enforcement officials, your prosecutors and other personnel are trained properly. And these are very technical areas. If you don’t get it right, then you’ll be wasting your resources. In the end, the countries have got to have the ability to be able to trace, track, seize, confiscate and even forfeit proceeds of crime. These are important factors. It is one thing to criminalise money laundering but if you don’t have the ability to seize, confiscate and forfeit, then you may end up convicting the criminals while their assets remain in a safe place. So it is not about just trying to get the criminals behind bars, it’s also about efforts to get to their assets, that dirty money. You know most criminals are prepared to go to jail, as long as they know that their millions are stacked away safely. So the whole approach to money laundering has to be different. You have to ensure the criminals don’t prefer to go to jail, although, you know, criminal justice would require that they dearly pay for what they do. But all the processes that I’m trying to explain now have to be broader than that. There must be disincentive so that when criminals get involved in criminal activities, they know they will go to jail and also lose everything.”
Capacity building must be an important factor then? What is PALP doing in regards to this?
“Yes, capacity building and training is a very important aspect. We have small countries here in the Pacific where you will find, for example, the attorney generals’ offices will be staffed by a small number of people. Of course, it varies from jurisdiction to jurisdiction but in a particularly small jurisdiction, you may have maybe four or five state solicitors and lawyers that deal with, not just one or two things, but a whole range of different things. This is unlike bigger countries in New Zealand, Australia, where you have attorney general’s office have specific departments that deal specifically with certain areas. In Australia, for example in the Attorney General’s office, there is a group of lawyers that deal specifically with mutual legal assistance and/or extradition issues only. We don’t have that capacity in our small countries in the Pacific. We have four or five lawyers dealing with everything. So we need to have people that specifically deal AML and CTF issues. The other problem is that there’s always a high turnover in the public sector so even when we get to train, whether it be prosecutors or law enforcement officials, they don’t hang around too long because obviously the lure of greener pastures elsewhere tend to draw them away. So it’s very important that we do maintain on-going training programmes for these small jurisdictions.”
The US State Bureau recently released INCSR 2007, its 24th International Narcotics Control Strategy Report (INCSR). It has obviously put four PICs on its “Jurisdiction of Concern” watch-list and is keeping a tab on nine others. How do we see ourselves in terms of that report?
“Well, that’s a very interesting report. I mean obviously there are some real issues that are of concern to the United States that has made it list these countries in this way. All I can say is that you can’t ignore what’s in the report. I think PICs should take cognisance of what’s in the report. Perhaps, it doesn’t always have to be a negative way of looking at things. Obviously, an automatic response from those countries that are monitored or listed there is being one of prime concern: ‘how come we are on the list?’ But to look at it and say: ‘OK, what does the report say? Could it be an opportunity for us to assess our own counter money laundering and terrorist financing, and see what are the weaknesses or vulnerabilities?’ The thing is there is a tendency for countries—especially after they came off the FATF blacklist a couple of years ago—to take it easy. A few Pacific islands countries came up on that list, including some who are now listed by the US. As soon as they came off, everyone breathed a sigh of relief and did nothing any more. They felt everything was OK. But you know money-launderers don’t stay in the same place. They are very creative, inventive criminal minds and they are going to come up with new ideas, new techniques to launder money, to finance terrorism so, whatever we have in place right now may not be enough to deal with that problem next year or in years to come. So our anti-money laundering system and counter terrorist financing regimes have to evolve, they have to change. They cannot stay in the same place, otherwise, they’re going to be left behind. And that I think is something that PICs have got to be aware of. Just because your legislation was in tune two years ago, it doesn’t mean it’s going to be fine next year. We have to keep up with international standards.”
When will PALP be fully staffed?
“We’ve been trying to recruit a regulatory expert and an expert in the financial sector and then hopefully by the end of the year, we’ll have another law enforcement expert up North. But we are not waiting for the full complement of our staff. We are still forging ahead and we’re doing work with whatever resources we have on hand.”
What about funding support? Are you happy or do you need more or are you going to get more?
“All I can say at this stage is that this programme is for four years. We have confirmed funding for two and we’re working on funding for the whole four year period so it’s useful to know if you have the funding for the whole four years but at this point, we don’t want to let that hold us back. We just want to get on with our work and do it.”
Finally you were talking about other countries coming on line to use your assistance in their AML/CTF legislations. What are some of these countries?
“We have Tonga, Vanuatu, Palau and Marshall Islands. We are awaiting further information from Fiji and Cook Islands, Samoa and the Solomon Islands. We have discussed a number of areas where we could possibly provide some assistance. You know, they are open to the idea and there are other donors also offering assistance so, it’s a matter of coordinating between the donors. It is these countries to come back to us and say they want us to help. There are specific countries that we’ve identified in terms of certain areas where legislations could be improved. We’re hoping we’ll expand our programme of assistance to them as well.”
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