The mutual evaluation report (MER) of Jamaica was adopted in November, 2016, during the XLIV Caribbean Financial Action Task Force (CFATF) Plenary held in the Turks and Caicos Islands and published in January 2017. Since it met the thresholds of having eight (8) or more NC/PC ratings for technical compliance and a low or moderate level of effectiveness for seven (7) or more of the eleven (11) effectiveness outcomes, Jamaica was placed under the enhanced follow-up process1.
This FUR analyses the progress of Jamaica in addressing the technical compliance requirements of the recommendations being re-rated. Technical compliance re-ratings are given where sufficient progress has been demonstrated.
This report does not analyse any progress Jamaica has made to improve its effectiveness.
The assessment of Jamaica’s request for technical compliance re-ratings and the preparation of this report was undertaken by the Group of Experts consisting of, Ms. Casandra Seetahal (Legal Expert), Senior Legal Counsel, Anti-Terrorism Unit, Office of the Attorney General and Ministry of Legal Affairs, Trinidad and Tobago and Ms. Vasilena Ivanova (Financial Expert), Policy Officer, Central Bank of Aruba with support from Mr. Pedro Harry, Law Enforcement Advisor of the CFATF Secretariat.
Section 4 of this report summarises the progress made to improve technical compliance. Section 5 contains the conclusion and a table illustrating Jamaica’s current technical compliance ratings.
Given these results and the effectiveness ratings in the MER, Jamaica was on enhanced follow-up as of the last FUR4.
OVERVIEW OF PROGRESS TO IMPROVE TECHNICAL COMPLIANCE
In keeping with the CFATF Mutual Evaluation Procedures, this FUR considers progress made up until 1 January 2022. In line with the ME Procedures and FATF Methodology, the Group of Experts’ analysis has considered progress to address the deficiencies identified in the MER and the entirety (all criteria) of each Recommendation under review, noting that this is cursory where the legal, institutional or operational framework is unchanged since the MER or previous FUR.
This section summarises the progress made by Jamaica to improve its technical compliance by implementing new requirements where the FATF Recommendations have changed since the MER was adopted.
Progress on Recommendations which have changed since adoption of the MER
Recommendation 1 (originally rated PC)
In its 4th Round MER, Jamaica was rated PC with R.1. The technical deficiencies included, (i) the incompletion of the national risk assessment, (ii) lack of involvement by private sector in the conduct of the NRA, (iii) no requirement for ensuring that the risk assessment is up-to-date, (iv) no mechanism in place to provide information on the risk assessment(s) to relevant competent authorities, FIs and DNFBPs and self-regulating bodies, (v) no requirement to allocate resources based on the understanding of risk, (vi) Terrorist Prevention Act (TPA) Regulations does not apply to DNFBPs, no provision in the TPA for FIs and DNFBPs maintain procedures to assess TF risks, no requirements for policies, control and procedures to be approved by senior management and (iv) application of de minimis threshold of US$250.00 not being based on any established criteria/national risk assessment.
Criterion 1.1: Jamaica completed its first money laundering (ML) and terrorist financing (TF) National Risk Assessment (NRA) in May 2016 and its second ML/TF NRA on August 16, 2021. The second NRA involved the participation of both public and private sector officials (unlike the first NRA). The second NRA covered the period from January 2016 to December 2019 with the findings being reasonable, comprehensive and robust. Following the completion of the second NRA, Jamaica developed and implemented a National Action Plan (NAP).
Criterion 1.2: As highlighted in the 2016 MER, the National Anti-Money Laundering Committee (NAMLC) is the competent authority charged with the responsibility of coordinating action to assess ML/TF risks. The 2021 NRA conducted by Jamaica involved participation of representatives from private sector officials from Financial Institutions (FIs), Designated Non-Financial Businesses and Professions (DNFBPs) and public sector officials as the exercise was one that involved inter-agency collaboration.
Criterion 1.3: Jamaica has completed two NRAs between 2016 and 2021 and has therefore sufficiently demonstrated that it is keeping its ML/TF risk assessment up-to-date. The NRA is not a “one-off” exercise and is required to be kept up-to-date on a periodic basis with each NRA building on the previous one to reflect changes in the existing ML/TF risks in the country
(section 11.2 of the 2021 NRA). Further, the authorities communicated that they are currently in the process of formalizing the NRA program by giving the NAMLC the statutory basis and formally including the conduct of future NRAs into the structure of the NAMLC.
Criterion 1.4: The findings of the 2021 NRA were published on the website of different competent authorities including the Bank of Jamaica (BOJ) and the Financial Investigation Division (FID), as well as the Ministry of Finance and Planning (MOFP) and are available to the different sectors including FIs, DNFBPs as well as the general public. To provide/share further information on the findings of the 2021 NRA, the Jamaican authorities also held discussions with various private sector officials.
Criterion 1.5: The NAP developed and implemented by Jamaica was approved by the Cabinet on 16 August 2021 and was subsequently shared with all competent and AML/CFT authorities. It contains various measures to mitigate and address the ML/TF risks identified in the 2021 NRA, to strengthen Jamaica’s anti-money laundering (AML), counter-terrorism financing (CFT) and counter-proliferation financing (CPF) framework, and to allocate resources on the basis of the ML/TF risks including higher risk identified in the 2021 NRA, and is therefore not a public document. There is no mention of the allocation of resources to all competent authorities in the NAP, specifically, among others, law enforcement agencies (LEAs). Though, the 2021 NRA notes that law enforcement has to strategically manage their resources and that resources including software and training were provided to LEAs to investigate ML and TF offences (section 5.6 of the 2021 NRA). In weighting this deficiency in the NAP. In weighting this deficiency, the Group of Experts took into consideration the ML/TF risks that exist and context of Jamaica and treated this deficiency as minor.
Criterion 1.6: (a) The de minimis threshold was established as a result of an assessment conducted by financial crime investigative authorities that found that transactions that pose the most risk for ML/TF are those in excess of approximately US$250.00. The exception was created by Jamaica to foster financial inclusion. In Jamaica, the de minimis threshold is not applicable to all financial institutions and activities. Reporting entities, with the exception of money transfer and money remittance agents and agencies,5 are exempted from collecting CDD information in circumstances involving customer transactions of US$250.00 (de minimis threshold). Reporting entities are authorised to apply the de minimis threshold in limited circumstances and not in cases where the nature of the transaction is such to give rise to knowledge, belief or suspicion that the transaction constitutes ML and TF (Regs. 7A and 6A of the Proceeds of Crime (POC) (ML) Regulations, 2019 and Terrorism Prevention (TP) Reporting Entities (RE) Regulations, 2019, respectively).
Regulations 7A and 6A of the POC (ML) and the TP (RE) Regulations, 2019, require reporting entities to establish risk profiles relative to all business relationships and one-off transactions (the product of a formal assessment of ML/TF risks by the regulated sector to determine the level of risk of a client or a transaction, which also takes into consideration the ML/TF risks at the national level). The Regulations further require reporting entities to undertake reasonable due diligence for all transactions including verification of the applicant’s identification for business and source of funds involved. Based on the interpretation of the provisions of the
Regulations, an exemption cannot be granted in higher risk situations and limits the circumstances in which the de minimis threshold can be applied (commensurate with the level of risk and also not in circumstances where there is knowledge, belief or suspicion of ML/TF).
The Bank of Jamaica’s (BOJ) Guidance provides extensive clarity and guidance to the reporting entities it supervises on the application of the de minimis threshold including the requirement to conduct ML/TF risk assessments to all transactions with no exemptions. Further, the BOJ Guidance notes that transactions assessed as high risk or falling within the category of high risk are considered critical transactions, which should not be subject to the de minimis approach. From a materiality standpoint, the Experts gave significant weighting to the BOJ Guidance, given that the BOJ supervises most of the material and higher risk sectors (deposit taking institutions – banks and money service businesses (MSBs), etc). Based on the foregoing, the Experts considered that the application of de minimis threshold is strictly limited, occurs in limited circumstances and is only applicable to particular types of FIs (except for MSBs which are considered higher risk based on the findings of the 2021 NRA) and DNFBPs. Guidance on the application of Regulation 7A of the POC (ML) Regulations is also reflected in the FSC Guidelines which mandate reporting entities to develop risk profiles for all business relationships and one-off transactions, FIs are required to conduct risk assessments and ensure that same take into consideration the risk at the national level. Taking into account the amendments to the Regulations in 2019 and the existence of the de minimis threshold, concerns remain that there is a disconnect between the de minimis approach and the requirement to apply a risk-based approach to all transactions and business activities. The Experts treated this deficiency as minor and placed more weight to the requirements present in the law with which all reporting entities are required to comply.
Dealers in Precious Metals and Stones are not required to comply with the FATF Recommendations due the fact that they are prohibited from engaging in cash transactions with a customer equal to or above EUR/US$15,000.00 (see requirements of FATF Recommendations 22 and 23 (c.22.1 (c) and 23.1 (b)). Section 101A (Limit on cash transactions) of the Proceeds of Crime Act (POCA) prohibits individuals and entities in Jamaica (except for certain FIs) from conducting cash transactions above the threshold of JA$1 million (less than US$8,000.00).
No financial activity in Jamaica is exempted on the basis that it is carried out by a natural or legal person on an occasional or very limited basis, proven that there are low ML and TF risks.
December 28, 2022 Published by The Caribbean Financial Action Task Force.