PRIVATE RIGHTS AND PUBLIC SAFETY

The Agenda

Two legislative proposals to step up the fight against money
laundering have sparked concerns in some quarters that they will give
the Government too much power to peek at private financial dealings,
possibly endangering personal and civil liberties.

Opposition spokesman on finance Audley Shaw acknowledged there are
dangers posed by money laundering, but the redress should not be at
the expense of "rights and freedoms under our constitution".

Jamaica Bar Association president Arlene Harrison worried that "the
duty and obligation" outlined in the proposed legislation could
undermine the relationship of "trust and confidence" between lawyer
and client.

Are these concerns overstated? National Security Minister Peter
Phillips thinks so. In addition to the principle of lawyer-client
confidentiality which he accepts, there was also the right of the
state to protect itself.

Furthermore, "every lawyer is obliged to uphold the law. The law
cannot be used to evade the law."

These opening salvos are likely to take on greater intensity as the
proposals are considered in greater detail in a joint select committee
of both houses of Parliament in the weeks, possibly months, ahead.

Minister of finance and planning Omar Davies, who tabled the measures
last Tuesday, is also inviting public comment so the process will
benefit from the "collective wisdom" of the Jamaican citizenry.

That's as it should be, because there are important issues involved,
going to the very heart of the relationship between the citizen and
the state in a dangerous, interconnected world.

One of the proposals tabled would amend the Money Laundering Act to
widen the net of institutions that must report suspicious financial
transactions to the authorities.

For example, lawyers, accountants and real estate dealers would have
to tell the Government about deals that look fishy. This already
applies to financial institutions like banks and credit unions.

In practical terms, it would mean that real estate agents are expected
to report a client who buys a multi-million-dollar house and pays in
cash. The lawyer who was part of that transaction would also be
required to report it.

The other amendment - to the Financial Investigations Act 2004 - would
give more muscle to the Financial Investigations Unit of the Ministry
of Finance, strengthening the investigative capacity of the state.

Interestingly, the bills were tabled on the same day that
Solicitor-General Michael Hylton warned that further measures would be
coming to require private sector firms and professionals to become
"gatekeepers" in the fight against money laundering.

Part of the discussion of the issues is, of course, clouded by the
continuing debate about laws to combat terrorism, much of that driven
by US pressure. And that is real.

But, as the solicitor-general said Wednesday, the forthcoming changes
he announced are in keeping with Jamaica's obligations as a member of
the Caribbean Financial Action Task Force (CFATF) which has been
developing and implementing certain rules and guidelines since the
early 1990s.

The CFATF is the regional agency of a global effort co-ordinated by
the Financial Action Task Force which sets out guidelines to combat
money laundering.

Investment flows, trade and financial flows would be at risk if
Jamaica opted out of these arrangements.

As the pending changes were announced in Jamaica, Bloomberg News
reported last week that the United States was also about to expand its
own list of gatekeepers to include big jewellery stores like Tiffany's
and insurance companies.

"The US Treasury's Financial Crimes Enforcement Network (FinCen) plans
to issue rules in the next 30 days to extend the 2001 USA Patriot
Act's anti-money laundering and terrorist-financing rules, which were
first applied to banks, credit unions, casinos, securities
broker-dealers and mutual funds," the agency reported.

"As you tighten control in the formal financial sector, banks for
example, people will look to move elsewhere to try and integrate dirty
money into the system," William D Langford Jr, associate director for
regulatory policy at the network, said in an interview with Bloomberg
News.

According to the United Nations Office on Drug and Crime (UNODC),
estimates of the amount of money laundered globally in one year range
between $500 billion and $1 trillion.

Money laundering is defined by UNODC as "the process that disguises
illegal profits without compromising the criminals who wish to benefit
from the proceeds".

There are two reasons why criminals - whether drug traffickers,
corporate embezzlers or corrupt public officials - have to launder
money: the money trail is evidence of their crime, and the money
itself is vulnerable to seizure and has to be protected.

UNODC outlines the three stages of the money laundering process. It
starts with placement, moving the funds from direct association with
the crime; layering, that is, disguising the trail to foil pursuit.

The final stage is integration, that is, making the money available to
the criminal once again with its occupational and geographic origins
hidden from view.

The placement stage can be quite a challenge for the drug trafficker,
the criminal that is of most concern to Jamaica.

It is a cash business. Given the profits involved, it can be quite a
problem to move around cash in bulk: $200,000 in $10 bills weighs 40
lbs. Plus, bank notes are also easily lost, stolen or destroyed.

Every criminal needs to "launder" the proceeds of crime, but where
organised crime, drug trafficking and corruption are involved, the
consequences of money laundering are bad for business, development,
government and the rule of law, UNODC observed.

How far should the effort to overcome these negative consequences go?
Hylton acknowledged, in an interview with Ronnie Thwaites on
Independent Talk, that it's not easy to find the right balance between
protecting the state and the integrity of the financial system and the
right to privacy.

In looking for the balance, we should all be guided by the principle
that the right to privacy, in a society based on law, cannot be based
on a presumed right to be a willing accomplice in lawbreaking.

We must also ensure that mechanisms are in place to keep confidential,
information passed to the authorities. Information should be a tool to
point investigators in a certain direction, not to place the burden of
proof of criminality on the source of the information.

Law enforcement agencies have to make a case tight enough to stand up
in court.

And we should participate in international forums to ensure that the
anti-money laundering guidelines are applied even-handedly. There
should not be one set of rules for the big powers and another for
small nations like Jamaica.