Thursday, October 29, 2020

St. Maarten must give priority to anti-money laundering laws

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THE HAGUE–St. Maarten will have to give high priority in the coming months to securing the recommendations of the Financial Action Task Force (FATF) in legislation if it is to avoid a public warning which will have serious repercussions for international banking traffic.

 Dutch State Secretary of Home Affairs and Kingdom Relations Raymond Knops stated this in response to two sets of written questions filed separately by Members of the Second Chamber of the Dutch Parliament Roald van der Linde and André Bosman, both of the liberal democratic VVD party, and Chris van Dam of the Christian Democratic Party CDA early June.

The Members of Parliament (MPs) expressed great concern about media reports that St. Maarten has not adopted all legislation to prevent money-laundering and financing of terrorism and as a result is non-compliant with the FATF recommendations.

St. Maarten is a member of the Caribbean Financial Action Task Force (CFATF), which is a FATF-style regional body. It was determined in 2012 that St. Maarten did not comply with 14 of the 16 main FATF recommendations. After five years, the non-compliance still existed because St. Maarten did not comply with 11 recommendations.

Read MoreWorld Bank to assist St. Maarten with anti-money laundering actions

As such, St. Maarten was placed in the first stage of more stringent follow-up in November 2017. This means that St. Maarten is subject to more frequent follow-up reports and the possibility of implementing phased countermeasures.

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CFATF sent the St. Maarten government a warning letter in 2018 and a high-level mission to St. Maarten took place in August 2018. In 2018, CFATF made an agreement with St. Maarten about the implementation and change of six crucial laws against money-laundering and financing of terrorism.

Early May 2019, the St. Maarten Parliament approved several laws regarding the obligatory reporting of border-crossing money transports, the Unusual Financial Transactions Bureau MOT and the national ordinance on money-laundering and financing of terrorism.

According to Knops, in the coming months St. Maarten will have to give high priority to securing the FATF recommendations, including the changes to the Civil Code, the Penal Code and the Procedural Criminal Code.

CFATF decided to maintain St. Maarten’s status quo late May 2019. Issuing a public declaration in November 2019 may be the next step in the process of countermeasures. This could harm the diplomatic traffic of the Kingdom and within CFATF, Knops explained.

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If the CFATF were to issue a public notice, St. Maarten will be considered a country that, due to strategic shortcomings, forms a risk for the international financial system. Member states will be called on to take countermeasures.

This may imply that international banks have to take additional precautionary measures in the money transactions with St. Maarten. In the worst-case scenario, the international banks can refrain from engaging in monetary transactions with St. Maarten banks. This will have severe repercussions for the foreign monetary traffic.

Knops voiced his concerns about the lack of compliance and spoke of an “alarming situation.” “All countries in the world are supposed to comply with the FATF recommendations to protect the integrity of the international financial system,” he stated.

Bad compliance with anti-money-laundering legislation will have repercussions for country St. Maarten, also for the effective investigation of money-laundering cases. As money laundering has many border-crossing aspects, an international approach is required. For that reason, international standards have been formulated to prevent the use of the financial system for money-laundering and financing of terrorism, Knops explained.

  “I am keeping a close watch on the situation. Country St. Maarten has implemented a number of necessary adaptations, but it remains important for St. Maarten to take the required steps and to give high priority to this,” Knops stated.

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