Corruption fight stalled

Jamaica’s plan to introduce unexplained wealth orders (UWOs) to combat money laundering has stalled, with the Government stating the policy is “still at the concept stage”.

An unexplained wealth order is a court directive that allows law enforcement to confiscate assets from individuals who cannot demonstrate that their wealth was obtained legally.

“The policy on the application of unexplained wealth orders is still at the concept stage and is yet to receive formal approval from the Cabinet, to amend the legislation to give effect to the proposal,” the Ministry of National Security said on September 6, in response to questions from The Sunday Gleaner. “At this stage, the responses to your questions touch on several policy areas that remain unsettled and, consequently, [are] treated as confidential.”

The discussions surrounding UWOs have intensified following the September 17 tabling of a controversial Integrity Commission (IC) investigation report into Prime Minister Andrew Holness’ financial affairs.

The commission’s director of investigation (DI), Kevon Stephenson, found what “appeared to be unexplained growth” of $1.9 million in Holness’ declared assets for 2022. Additionally, questions arose regarding deposit and withdrawal transactions totalling $473 million and $427 million, respectively, involving companies connected to Holness. The report also raised issues of tax compliance and the use of charity funds.

However, Stephenson could not reach a conclusion due to , among other things, Holness’ “refusal” to provide a breakdown of his expenses for 2019-2022.

“The DI was unable to arrive at a conclusion regarding illicit enrichment concerning Holness as he did not have access to a schedule of [Holness’] personal expenses,” the report said.

Despite criticism from government lawmakers, the matter has now been referred to the Financial Investigations Division (FID), Jamaica’s primary agency for financial crimes.

Holness has denied any wrongdoing and is considering court action. He has also called for a review of the law governing the anti-corruption agency.

Despite advancements, authorities acknowledge institutional weaknesses in combatting crime and corruption, which are estimated to cost the Jamaican economy at least $150 billion annually – around five to 10 per cent of its gross domestic product. In June 2022, National Security Minister Dr Horace Chang said proceeds from lottery scamming, money laundering, cybercrimes, and drug and firearms trafficking resulted in an annual flow of at least US$1 billion into Jamaica, posing a “grave risk” to the stability of the Jamaican State.

politically exposed persons

Proposed reforms include the implementation of UWOs, especially for politically exposed persons, high-net-worth individuals, foreign entities, or shell companies. The UWO process is viewed as less demanding than the standards required under the Proceeds of Crime Act (POCA), a 2007 law modelled after the UK’s, which allows the authorities to seek forfeiture of unlawfully obtained assets without needing a criminal conviction. A specific UWO provision, which shifts the burden of proof onto individuals to explain their source of wealth, is seen in legal and law enforcement circles as a means to add certainty, clarity, and efficiency to the system.

In August 2020, Prime Minister Holness signed a memorandum of understanding with the Opposition, private sector, and civil society, pledging to legislate UWOs. The proposed legislation was expected in Parliament by the fourth quarter of 2021, but nothing materialised.

Delivering the Throne Speech in February 2023, Governor General Sir Patrick Allen announced again that the Government would amend POCA to include UWOs during the 2023-2024 parliamentary year, which also ended without any progress.

In an interview with The Sunday Gleaner on September 6, Keith Darien, head of investigations at the Financial Investigations Division, emphasised that criminals have become adept at exploiting gaps in current laws like POCA.

“Money laundering has become extremely complex and the tools that exist in the first phase and even in the second phase that we currently have under POCA are not as effective as when the legislation was enacted in 2007. Why? Criminals clearly now understand the [in]effectiveness of this law,” he stated. “They’re better able to conceal their income, they know how to conceal their properties by not having those properties in their name by even establishing companies as front/shell companies to give the impression that they are earning legitimate income.”

With more than 150 active money laundering investigations involving assets exceeding $70 million, Darien noted that most cases would be “ideal” for UWOs.

“It would be a total win for Jamaica, law enforcement, and law-abiding citizens,” he added, pointing out that the FID has over 800 active cash seizure court cases involving more than $1 billion in assets tied to suspected money laundering.

“What we have are assets that, on the surface, do not match the person’s known legitimate income. With a UWO, they need to explain to the court where those funds came from,” Darien explained. “They are not being pursued for criminal offences with the UWO; it is the assets that they need to explain to the court.”

In jurisdictions like Trinidad and Tobago and the United Kingdom, UWOs are issued by courts upon application by law enforcement, if certain criteria are met. Darien outlined three major requirements: establishing the person’s involvement in criminal activities, determining the value of the assets, and using tax filings and legitimate income to confirm that the assets are disproportionate to their wealth.

“Once we establish those three criteria, we [would be able to] compile our files, go to court, and the court would freeze the assets and compel the individual to explain the source of funds used to acquire them,” he stated.

Opposition Senator Peter Bunting, the People’s National Party spokesman on national security, emphasised that his party has long supported stronger anti-corruption tools.

illicit enrichment offence

“UWO is necessary to complement the illicit enrichment offence, which only applies to public servants,” he noted, referring to the Corruption Prevention Act that empowers the authorities to demand explanations from government officials if their assets are disproportionate to their lawful earnings.

Bunting criticised the Government’s inaction, claiming the implementation of UWOs agreed upon through the Crime Monitoring and Oversight Committee has been “totally disregarded by the Government”.

Concerns about a potential reversal of the burden of proof and property rights have raised constitutional issues, which Darien acknowledged.

“They have a constitutional right not to do so (disclose financial history) and even if they are being interviewed under caution, they have that constitutional right not to say anything. And anyone, whether they are innocent or guilty of an offence, tends to utilise that mechanism in not answering anything. So that’s a major challenge.”

Lloyd Distant, chairman of the Crime Consensus Monitoring and Oversight Committee, confirmed that the Government has indicated there are “constitutional concerns” regarding incorporating UWOs under POCA, although specifics remain unclear.

He acknowledged the “real challenge”, mentioning that the group sought advice from constitutional experts, who suggested that there may be an “approach” for including UWOs in the law for investigative purposes.

“To date, the feedback we’ve received is that they (Government) are still focused on it, but lack a legislative solution,” he remarked on Friday.

Asked Friday whether the Opposition would support the Government in addressing any constitutional challenges, Bunting responded: “I have not seen a legal opinion that speaks to the specific constitutional amendments required. However, as a general rule, the PNP has always supported legislation and action to combat corruption.”

Public affairs commentator Howard Mitchell argued that Jamaica could follow the UK’s model without breaching constitutional rights while ensuring safeguards to protect society from the “untrammelled impulses” of self-interested actors. He said the law already allows for the burden of proof to shift from the accuser to the accused in circumstances where there is reason to believe that criminal acts have occurred or that public property may have been misappropriated or that the taxes due to the State have not been paid.

“We could, without doing violence to our Constitution, follow the British legislative path and allow a Supreme Court judge ... to conclude, based on reasonable evidence, that a public official paid by the public purse or a private citizen whose activities are indicative of certain crimes and cannot justify his wealth from his day job may be required to show a designated authority, on a confidential basis, where the money came from,” said Mitchell, a commercial attorney who once led the Private Sector Organisation of Jamaica.

He added: “Once the source is established and deemed legitimate, all constraints would be immediately lifted. We must remember that our country is our home, and we are the only ones who cannot be expelled or denigrated.”

Although UWOs have not always had the desired impact – evidenced by a 2022 UK parliamentary assessment revealing only nine orders had been issued across four cases since their introduction in 2018 despite a reported increase in money laundering since 2017– some jurisdictions, like Ireland, credit UWOs with significantly disrupting criminal activities.

Despite the delays, Jamaica’s Ministry of National Security noted that amendments have been made to POCA to enhance the fight against organised crime, money laundering, and terrorism financing. It pointed to cash transactions limited to $1 million and the expansion of POCA’s reach to non-financial entities such as real estate agents, lawyers, and accountants.

jovan.johnson@gleanerjm.com