1. What is an NRA?
  2. What is FIU’s role in the NRA?
  3. Why is Belize conducting an NRA?
  4. What is a 4thRound Mutual Evaluation?
  5. What is FATF?
  6. What is FATF Recommendation 1?
  7. What is CFATF?
  8. What is the NRA methodology?
  9. Who is overseeing the NRA?
  10. What sectors, agencies and stakeholders are involved in the NRA?
  11. What are the NRA phases and timeline?
  12. What are the NRA deliverables?
  13. How frequent will the NRA be conducted?
  14. What is NAMLC
  15. What is the composition of NAMLC?
  16. What does NAMLC do?
  17. What is risk based approach?
  18. Why is an RBA so important?
  19. What is money laundering?
  20. What are the three stages of money laundering?
  21. What are the effects of money laundering?

A. What is an NRA?

A NRA is a comprehensive exercise to assist in identifying, assessing and understanding a country’s ML &TF threats, vulnerabilities and the consequential risks with a view to mitigate illicit financial flows and transactions.

The NRA process requires:
an identification of the country’s criminal activities that generate the most proceeds,
an assessment of the vulnerability of the financial and private sectors to ML,
ascertaining the controls and weaknesses of the criminal justice system,
determining the effectiveness of the AML/CFT preventative measures and
allocating resources based on the level of risks, among others.

B. What is FIU’s role in the NRA?

The Financial Intelligence Unit (FIU) is Belize’s primary institution in the fight against money laundering and other financial crimes and is the co-coordinator for the NRA.

C. Why is Belize conducting an NRA?

Belize must demonstrate compliance with FATF Recommendation 1 well before Belize’s 4thRound of Mutual Evaluations scheduled for the year 2021.

D. What is a 4th Round Mutual Evaluation?

The 4th Round of ML/TF mutual evaluation is a country assessment conducted by CFATF Assessors. The scope of the evaluations involves two inter-related components:

  • Desk-based questionnaire that assesses technical compliance with FATF’s 40 Recommendations.

This assessment determines whether the existing laws, regulations or other required measures are in force and effect, and whether the supporting AML/CFT institutional framework is in place.

  • On-site inspection that evaluates the effectiveness of 11 immediate outcomes

During the on-site, CFATF Assessors conducts interviews and is provided evidence by national stakeholders that will determine whether the current AML/CFT systems are working, and the extent to which the country is achieving the defined set of outcomes.

E. What is FATF?

FATF is an inter-governmental, “policy-making body”. FATF’s objectives – to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
FATF monitors the progress of its members in implementing necessary measures and works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

F. What is FATF Recommendation 1?

As it applies to the Country:
Rec. 1 states the country must identify and assess the money laundering & terrorist financing risks. Based on an understanding of the risks, Belize must apply a risk-based approach to allocating resources and implementing measures to prevent or mitigate money laundering & terrorist financing.

As it applies to Financial Institutions & DNFBPs:
Rec. 1 requires Financial institutions & DNFBPs to:

  • take appropriate steps to identify, assess, and understand their ML/TF risks
  • document their risk assessments
  • have policies, controls and procedures, to manage and mitigate the risks
  • monitor the implementation of those controls
  • take enhanced measures to manage and mitigate the risks where higher risks are identified

G. What is CFATF?

Caribbean Financial Action Task Force.

Is a FATF-styled regional body comprising of 27 States the Caribbean Basin, Central and South America who have agreed to implement common countermeasures to address the problem of ML, TF and the Financing of the Proliferation of Weapons of Mass Destruction.

CFATF’s main objective is to achieve effective implementation of and compliance with FATF’s recommendations to prevent and control ML and to combat the FT.

H. What is the NRA methodology?

Belize is utilizing the World Bank’s NRA methodology and self-assessment tool that is comprised of 8 Modules:

  1. Threat Assessment
  2. National Vulnerability
  3. Banking Sector
  4. Securities Sector& Other Financial Institutions Sector
  5. Insurance Sector
  6. DNFBPs
  7. TF Risk Assessment

Seven working groups were established and comprises of national stakeholders across Government Agencies that follow a systematic method of data identification & collection, data analysis and evaluation.

I. Who is overseeing the NRA?

The NRA is being spearheaded by NAMLC & coordinated by the FIU

J. What sectors, agencies and stakeholders are involved in the NRA?

AML/CF Supervisory Authorities:

  • FIU
  • Central Bank
  • IFSC
  • Ministry of Finance

DNFBP Sector:

  • Attorneys
  • Accountants
  • Casinos
  • Motor Vehicle Dealers
  • Real Estate
  • Free Zone
  • NPOs/NGOs
  • Trust & Company Service Providers
  • Dealers in PM & Stones

Banking Sector:

  • International banks
  • Domestic banks

Securities Sector

Insurance Sector

Other Financial Institutions Sector:

  • Credit Unions
  • Money or Value Transfer Services
  • Money Remitters
  • Money Lenders
  • Pawnbrokers\

Government Agencies

  • Ministry of Trade
  • Ministry of Foreign Affairs
  • AG Ministry
  • DPP
  • Income Tax
  • GST
  • Ministry of Finance
  • Belize Police Department
  • Customs
  • Immigration

K. What are the NRA phases and timeline?

Phase 1 – Data identification & collection

  • Expected timeframe: December 2016 – July 2017

Activities to be conducted:

  • NRA workshop with World Bank
  • Interviews
  • Focus group meetings
  • NRA questionnaires
  • Requests for information

Who will be conducting these activities:

  • Central Bank
  • FIU
  • IFSC
  • Ministry of Finance
  • Ministry of Trade
  • Belize Police Department
  • AG Ministry
  • Immigration &
  • Customs

Requires stakeholder participation & information from:

  • Banking sector – international and local banks
  • Insurance Sector
  • Non-Financial Institutions – Credit Unions, Money or Value Transfer Services, Money Lenders, Pawnbrokers
  • Securities Sector
  • DNFBPs – Attorneys, Accountants, Casinos, Motor Vehicle Dealers, Real Estate, Free Zone, NPOs/ NGOs, Trust & Company Service
  • Providers, Dealers in Precious Metals & Stones
  • Government Agencies & Ministries

Phase 2 – Data analysis

  • Expected time frame: June 2017 to September 2017

Activities to be conducted:

  • Conduct data analysis on all data and information gathered
  • Input into World Bank tool
  • Prepare draft reports

Who will be conducting these activities:

  • All NRA working group participants

Phase 3 – Evaluation

  • Expected time frame to commence: October 2017 to January 2018

Activities to be conducted:

  • Finalize National AML/CFT action plans and reports
  • Begin implementing recommendations and action items

Who will be conducting these activities:

  • NRA working group leaders
  • The AML/CFT Supervisory Authorities – Central Bank, FIU, OSIPP&IFSC
  • Ministry of Finance
  • Ministry of Trade
  • Belize Police Department
  • AG Ministry
  • Immigration &Customs

L. What are the NRA deliverables?

  1. The country will gain an understanding of the main sources and methods of ML in Belize
  2. Readily identify the threats and vulnerabilities that create money-laundering opportunities within the financial system
  3. Identify & prioritize the sectors that are most vulnerable to ML/TF
  4. Produce an NRA action plan to address ML risks identified
  5. Guide the development of a National AML policy document
  6. Build public sector capacity

M. How frequent will the NRA be conducted?

The NRA will be conducted every 3–5 years, depending on the findings & implementation of the action plan.

N. What is NAMLC?

National Anti-Money Laundering Committee

O. What is the composition of NAMLC?

  • the Director of the Financial Intelligence Unit, who shall be the Chairman;
  • the Solicitor General;
  • the Financial Secretary;
  • the Chief Executive Officer of the Ministry responsible for the Police;
  • the Commissioner of Police;
  • the Governor of the Central Bank of Belize;
  • the Director of Public Prosecutions;
  • the Comptroller of Customs;
  • the Director of Immigration;
  • the Supervisor of Insurance;
  • such other persons as the Minister may from time to time appoint.

P. What does NAMLC do?

NAMLC was established to advise the Minister of Finance on:

  • the detection and prevention of Money Laundering (ML) and Terrorist Financing (TF)
  • development of a National Anti-Money Laundering (AML) action plan
  • recommendations to enhance the effectiveness of supervisory and law enforcement authorities
  • the development and implementation of policies to combat ML/FT (MLTPA Section 77B)

Q. What is a risk based approach?

An AML/CFT risk-based approach (RBA) means that countries, competent authorities, businesses, financial and non-financial institutions identify, assess, and understand the ML & TF risk to which they are exposed, and take the appropriate mitigation measures in accordance with the level of risk. This is in compliance with FATF Recommendation 1. The general principle of the RBA is that, where there are higher risks, countries should require competent authorities, businesses, financial and non-financial institutions to take enhanced measures to manage and mitigate those risks; and that correspondingly, where the risks are lower, simplified measures may be permitted.

R. Why is an RBA so important?

The RBA is an effective way to combat money laundering and terrorist financing. It is imperative that the country, AML/CFT Supervisory Authorities, and Reporting Entities demonstrate their understanding the ML/FT risks posed to their sector and business and provide evidence of applying enhanced or simplified measures to manage and mitigate risks.

For areas of higher risk, more resources should be allocated, while those that pose lower risk should be allocated less.
The Risk based approach to supervision lies at the heart of the compliance programme of any supervisory and reporting entity. The application of the risk based principle is intended to reduce the risk of failure or inappropriate behavior of institutions. This leads to more forward looking and outcome focused policies within an organization.

The Risk based approach will lead to more cost-effective utilization of resources through prioritization based on risk. This will encourage a strong risk management culture within institutions.

Given its importance to effective management, organizations should seek to strengthen its money laundering compliance capacity by having dedicated money laundering and compliance officers. (MLCO)

S. What is money laundering?

Money laundering is the process whereby “dirty money” produced through criminal activity and corruption is transformed into “clean money,” the criminal origin of which is difficult to trace.ML is of critical importance, as it enables the criminal to enjoy these profits without jeopardizing their source.

T. What are the three stages money laundering?

  1. PLACEMENT involves placing the proceeds of crime in the financial system.
  2. LAYERING involves converting the proceeds of crime into another form and creating complex layers of financial transactions to disguise the audit trail and the source and ownership of funds. This stage may involve transactions such as the buying and selling of stocks, commodities or property.
  3. INTEGRATION involves placing the laundered proceeds back in the economy to create the perception of legitimacy.

The money laundering process is continuous, with new dirty money constantly being introduced into the financial system.

U. What are the effects of money laundering?

How money laundering affects business:
The integrity of the banking and financial services marketplace depends heavily on the perception that it functions within a framework of high legal, professional and ethical standards. A reputation for integrity is the one of the most valuable assets of a financial institution.
If funds from criminal activity can be easily processed through an institution – either because its employees or directors have been bribed or because the institution turns a blind eye to the criminal nature of such funds – the institution could be drawn into active complicity with criminals and become part of the criminal network itself. Evidence of such complicity will have a damaging effect on the attitudes of other financial intermediaries and of regulatory authorities, as well as ordinary customers.

As for the potential negative macroeconomic consequences of unchecked money laundering, one can cite inexplicable changes in money demand, prudential risks to bank soundness, contamination effects on legal financial transactions, and increased volatility of international capital flows and exchange rates due to unanticipated cross-border asset transfers. Also, as it rewards corruption and crime, successful money laundering damages the integrity of the entire society and undermines democracy and the rule of the law.

The influence of ML on economic development:
Launderers are continuously looking for new routes for laundering their funds. Economies with growing or developing financial centers, but inadequate controls are particularly vulnerable as established financial center countries implement comprehensive anti-money laundering regimes.
Differences between national anti-money laundering systems will be exploited by launderers, who tend to move their networks to countries and financial systems with weak or ineffective countermeasures.
Some might argue that developing economies cannot afford to be too selective about the sources of capital they attract. But postponing action is dangerous. The more it is deferred, the more entrenched organized crime can become.
As with the damaged integrity of an individual financial institution, there is a damping effect on foreign direct investment when a country’s commercial and financial sectors are perceived to be subject to the control and influence of organized crime. Fighting money laundering and terrorist financing is therefore a part of creating a business-friendly environment which is a precondition for lasting economic development.

The ML connection with society at large:
The possible social and political costs of money laundering, if left unchecked or dealt with ineffectively, are serious. Organized crime can infiltrate financial institutions, acquire control of large sectors of the economy through investment, or offer bribes to public officials and indeed governments.
The economic and political influence of criminal organizations can weaken the social fabric, collective ethical standards, and ultimately the democratic institutions of society. In countries transitioning to democratic systems, this criminal influence can undermine the transition. Most fundamentally, money laundering is inextricably linked to the underlying criminal activity that generated it. Laundering enables criminal activity to continue.