Saturday 6 June, 2020

POCA law to add new penalties including $5-m for companies in breach

Dr Horace Chang (File Photo)

Dr Horace Chang (File Photo)

Minister of National Security, Dr Horace Chang is urging that the Jamaica move speedily to address deficiencies in money laundering laws and bring itself in line with recommendations of the Financial Action Task Force (FATF).

Penalties to corporate bodies are being increased under proposed amendments.  

The amendment to Regulation 5, accordingly, makes reference to the size and nature of the business in relation to the assessment of risk.  This amendment ensures that the regulated business is applying the compliance requirements using a risk-based approach.

This means that supervisors, financial institutions and intermediaries identify, assess and understand the Money Laundering/Terrorism Financing risks to which they are exposed, so that they can focus their resources where the risks are highest.

The fines associated with offences to the Regulation have also been increased to make it more dissuasive. For an individual, the fine is now $3 million and, for a corporate body, it is now $5 million before the Parish Court.

Minister Chang previously tabled the Proceeds of Crime (Amendment) Act, 2019 on October 15, 2019; as well as the Terrorism Prevention (Amendment) and United Nations Security Resolution Implementation (Amendment) Acts, 2019 on October 29, 2019.

Speaking in the House of Parliament on Tuesday, he said that, based on the review done on Jamaica’s level of compliance, amendments are needed to the Proceeds of Crime (Money Laundering Protection) Regulations, 2007 to make it fully compliant and also aid efforts to stem money laundering.

He outlined the first amendment to be that of insertion of the term, ‘ultimate beneficial owner’. Chang explained, “With this amendment, regulated businesses will be required to establish risk profiles regarding their business relationships in order to determine which of such relationships are high risk."

Such determination will not only be limited to the applicant for business, but also the ultimate beneficial owner.

Other amendments include the use of the terms ‘group’ and ‘control’, which will speak to the application of group-wide policies for the implementation of Anti-Money Laundering and Counter Terrorist Financing mechanisms.

Regulation 3 under the Act has been amended to specify the time period (15 days after the end of each month) required for financial institutions to report to the Designated Authority on transactions involving the prescribed amount. The inclusion of this provision enhances the investigative capability of the Designated Authority, Chang outlined.

Amendment of Regulation 7 deals with identification procedures, business relationships and transactions. It has been amended to take into account the application of risk management procedures while the regulated business seeks to identify and verify the applicant for business, Chang said.

The amendment also provides for the issuance of guidelines by the Competent Authority limitations on the number or types of transactions that may be performed.

It may also include requirements for monitoring large or complex transactions that are outside of the norm.

Amendment of Regulation 7A requires businesses in the regulated sector to establish risk profiles for business relationships and one-off transactions to determine the type of due diligence procedures to apply.

The proposed amendment seeks to strengthen the risk management process by requiring businesses in the regulated sector to consider, among other things, the business products offered; its distribution channels;  the national, regional and international environment in which the regulated business operates; and the size and nature of its operation.

Additionally, the Regulation, as amended, stipulates that the businesses in the regulated sector, in considering the risks as assessed, should employ commensurate measures in order to effectively mitigate against those risks.

The insertion of new regulations speaks to new penalties and sanctions. A new Regulation 20 comprises amendments to penalties applicable to contravention of certain regulations. These regulations are 7,7A, 7B, 11, 14, 15, 16 and 17.

A  new regulation 21 allows for the imposition of fixed penalties on regulated businesses to be enforced by the Competent Authority. This proposal is akin to provisions within the Banking Services Act, 2014, which allows licencees the opportunity to discharge any liability to conviction of specified offences by payment of a fixed penalty.

To support the proposed fixed penalty regime, a new schedule has been added which includes a prescribed Fixed Penalty Notice.

In conclusion, Chang said he estimated that over 40 per cent of businesses within the Jamaican economy operate informally.

He said, “While these amendments will satisfy our international obligations, the intention is for them to be inclusive, and to bring informal operations into our formal financial sector. The Regulations will allow for the application of different layers of risk assessment and improve the ease of doing business as well as provide for greater inclusion of a wider cross section of Jamaicans in our financial sector.”

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