Caribbean Financial Action Task Force Upgrades Jamaica’s Rating

Jamaica’s work to improve its anti-money laundering and counter financing of terrorism framework, to meet international standards, is continuing to reap success with the recent upgrade of the country’s ratings by the Caribbean Financial Action Task Force (CFATF).

This was disclosed by Minister of Foreign Affairs and Foreign Trade, Senator the Hon. Kamina Johnson Smith, who noted that “(two weeks ago), at a review meeting of the CFATF, Jamaica has been upgraded in 12 recommendations. We applied for reclassification and we have been upgraded,” she said.

“The Government is actively seeking to continue to improve our ratings by taking the necessary legislative and administrative measures to address deficiencies,” she added.

CFATF is an organisation of states and territories of the Caribbean basin, which have agreed to implement common counter-measures against money laundering and terrorism financing recommended by the Financial Action Task Force (FATF), a global money laundering and terrorist financing watchdog.

Senator Johnson Smith, who is also Leader of Government Business in the Upper House, was piloting two Orders during the sitting of the Senate on Friday (December 18), which will serve to further strengthen the country’s anti-money laundering and counter-financing of terrorism framework.

They are the Banking Services (Designated Financial Services) (Business of Buying and Selling Foreign Currency) Order, 2020; and the Banking Services (Designated Financial Services) (Provision of Electronic Retail Payment Services) Order, 2020.

“These Ministerial Orders will undoubtedly contribute to the enhancement of the legal framework required to meet international standards,” Senator Johnson Smith said.

The Orders will designate electronic retail payment services and the buying and selling of foreign exchange as financial services under the Banking Services Act (BSA).

“It may come as a surprise to some that these services are not already so designated, but this is indeed a gap to be closed by us by proceeding with these matters,” she said.

Senator Johnson Smith said it is one of the objectives of the Bank of Jamaica (BOJ) to ensure that there is appropriate regulatory oversight for anti-money laundering and counter financing of terrorism measures “and this must, of course, include oversight of services provided by cambios and electronics retail payment service providers”.

“The BOJ is therefore seeking the designations to fulfill certain recommendations and address deficiencies identified in the CFATF,” she noted.

Senator Johnson Smith said the Government has been working assiduously on these matters including the passage of significant legislation last year, together with supporting regulations under both the Terrorism Prevention Act and the Proceeds of Crime Act.

She noted that the objective of the Orders is to expand the definition of financial services to include the buying and selling of foreign currency and engaging in electronic retail payment services.

Mrs. Johnson Smith explained that in Section 2 of the BSA, the financial institution is defined as a person, who undertakes or engages in financial services. The definition of financial services under the BSA however, does not include the buying or selling of a foreign currency or the provision of e-payment services.

Senator Johnson Smith further pointed out that the FATF includes in its definition of financial institutions, any natural or legal person who conducts, as a business, services related to money or transfer of value trading in foreign exchange and money and currency changing.

“The Orders will accordingly align all three. That is, the FATF designation, the definition of financial institution and the definition of financial services under the BSA,” she said.

In the meantime, she informed that the Central Bank is currently engaged in a project to prepare policy proposals to strengthen the legislative and regulatory framework for the regulation of such payment services, to provide the enabling environment for the delivery of regulated financial services to Jamaicans.

“The designation of payment services as financial services, will complement the BOJ’s efforts at improving financial access under the national financial inclusion strategy as well,” she said.

The Orders were approved by members of the Senate.