Country remains on CFATF watch list as Finance Minister reports improvements to Jamaica’s AML/CFT framework

Jamaica has been upgraded in 12 of the 19 areas of its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework in which the Caribbean Financial Action Force (CFATF) has found the country deficient.

Finance Minister Dr. Nigel Clarke, who made the announcement in Parliament Tuesday evening (January 19), said the upgrade came as Jamaica applied for a re-rating in 19 of the 40 Financial Action Task Force (FATF) Recommendations in which the country was previously deemed either partially compliant or non-compliant. FATF is the parent body of the CFATF and is regarded as the global regulator of AML/CTF framework among various jurisdictions.

In breaking the news to members of parliament, Clarke reported, “I am happy to report that (a) Jamaica received upgrades in 12 of those recommendations (b) while the rating remained unchanged for six recommendations and (c) Jamaica received one downgrade as a result of changes in the requirements of that recommendation post the finalisation of our last mutual evaluation.”

He declared that Jamaica is now compliant or largely compliant with 27 of FATF’s 40 recommendations, which represents a substantial improvement over compliance or partial compliance with only 17 out of 40 FATF recommendations in Jamaica’s mutual evaluation, which was undertaken in 2015 and published in 2017.

Jamaica’s positive AML/CTF developments

According to the Finance Minister, “this is a huge positive change Madam Speaker. Put another way, we are partially compliant with 13 recommendations and improvement over being partially compliant with 21 recommendations and non-compliant with two. This is a big positive change.” He stated that Jamaica needs to be compliant or largely compliant with at least 32 of the 40 recommendations to come out of the “follow-up process” with CFATF.

FATF deems a rating of compliant (C) or largely compliant (LC) as generally satisfying the requirements of the Recommendation.  A rating of partially compliant (PC) or non-compliant (NC), are considered insufficient to meet the standards.

Jamaica’s mutual evaluation report against the International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation referred to as FATF 40 Recommendations was done in 2015 by the CFATF and published in 2017. The report reflected a substantial number of deficiencies in Jamaica’s legislative framework with the FATF’s 40 recommendations.

In that report Jamaica received a rating of compliant or largely compliant with 17 out of the 40 Recommendations and based on that outcome the country was placed in the CFATF’s enhanced follow up process and, as such, is required to submit a follow up report at one of CFATF’s two Plenaries held annually.

Last month Jamaica submitted a third follow-up report, which was  considered at the recently concluded December 2020 Plenary of the CFATF, where the country applied for a re-rating in 19 of the 40 FATF Recommendations in which we were previously deemed either partially compliant or non-compliant.

Jamaica’s re-rating outcome

The results of the re-rating exercise are as follows:

• Three recommendations upgraded from Partially Compliant to Compliant. Recommendation 12—Politically Exposed Persons; Recommendation 21—Tipping-off and confidentiality and Recommendation 33—Statistics.
• Seven recommendations were upgraded from Partially Compliant to Largely Compliant. Recommendation 2 – National cooperation and coordination; Recommendation 10 – Customer due diligence;  Recommendation11 – Record keeping; Recommendation 14 – Money or value transfer services; Recommendation17 – Reliance on third parties; Recommendation 18 – Internal controls and foreign branches and subsidiaries and Recommendation 19—Higher-risk countries.
• One recommendation was upgraded from Non-Compliant to Largely Compliant, which was Recommendation 6—Targeted Financial Sanctions related to Terrorism and Terrorist Financing was upgraded from Non-Compliant to Largely Compliant.
• One recommendation was upgraded from Non-Compliant to Partially Compliant, which was Recommendation 8—Non-Profit Organizations.
• Recommendation 5—Terrorist Financing Offence maintained its rating of Largely Compliant, while five Recommendations maintained their initial rating of Partially Compliant.
• Recommendation 15—New Technologies, was downgraded from Compliant to Partially Compliant because the conditions for meeting the standards were amended post Jamaica’s mutual evaluation, to require that countries mitigate the emerging risks from virtual assets by ensuring that virtual asset service providers (“VASPs”) are regulated.

Legal framework being updated

According to the finance minister, “We are currently working on updating the legal framework to include regulation of VASPs. Since its mutual evaluation, Jamaica has pursued and implemented a number of initiatives to strengthen its AML/CFT/PF (terrorism proliferation) framework and has passed several amendments to its suite of AML/CFT/PF legislation.”

Clarke argued that the outcome he outlined came about due to the tremendous cooperation and collaboration among public sector agencies that are a part of the National Anti-Money Laundering Committee, chaired by the Bank of Jamaica. He reiterated the government’s commitment to strengthening of the country’s framework through the continued development of a sustainable programme designed to ensure that the adequacy of Jamaica’s AML/CFT laws and supporting infrastructure effectively disrupt the benefits of the proceeds of crime and disrupt the financing of any financial crime.

“In so doing, we are on the road to achieving Jamaica’s removal from the CFATF enhanced follow up process. Jamaica is also working on completing the actions included in its action plan agreed between the Government of Jamaica and FATF to improve the effectiveness of the country’s AML/CFT/PF framework,” Clarke told the the House of Representatives.

To this end, Jamaica is anticipating that the initiatives described by the finance minister to exit the CFATF follow up process would also work towards the country successfully exiting the FATF process and therefore ensures that the global community views Jamaica as a country whose economy is not susceptible to money laundering, terrorism financing and proliferation.