This is part of a series on Anti-money Laundering (AML) and Combating the Financing of Terrorism (CFT) in Suriname, South America.
Suriname, a thriving South American country, has been progressively increasing its anti-money laundering (AML) measures under President Chandrikapersad Santokhi's leadership. It is an upper-middle-income country with a diverse population of more than 600,000 and a rich cultural heritage influenced by Indigenous, Afro-Surinamese, and East Indian groups. Its capital, Paramaribo, combines Dutch colonial architecture with modern urban development.
President Chandrikapersad Santokhi
Suriname's economy heavily relies on natural resources, particularly in the mining sector, which generates revenue for the public sector. However, this dependence makes the country vulnerable to external shocks and fiscal instability. The nation has progressed in regulating its financial system, particularly in Anti-Money Laundering and Combating the Financing of Terrorism. Still, legal gaps persist, requiring further reform to mitigate financial crime risks.
Since 2020, the administration has been dedicated to strengthening enforcement and upgrading laws to lessen dependency on a cash-based economy. These continuous initiatives indicate the government's commitment to building a more transparent and strong financial system, establishing Suriname as a nation willing to confront money laundering hard-on.
This piece focuses on the legal and regulatory gaps that must be sealed. Let us delve into the details.
Table of Contents
Primary Gaps in AML/CFT Framework in Suriname
We have explored the primary gaps that have led to further search and finding solutions. The issues are:
Inconsistent Enforcement
Inconsistent enforcement of AML/CFT regulations across jurisdictions is a significant gap, weakening the effectiveness of anti-financial crime measures and allowing criminals to exploit differences and operate in less stringent areas.
Outdated Regulations
The outdated AML/CFT regulations are a significant vulnerability to money laundering and terrorism financing, necessitating regular updates to address emerging financial technologies, new criminal behaviour typologies, and global standards.
Image source: Legal and regulatory balance
Lack of Resources
The gaps in AML/CFT frameworks are largely due to insufficient resources for compliance, enforcement, and regulatory bodies, often due to budget constraints and a lack of personnel and technological support.
Insufficient Collaboration
Collaboration among financial institutions, government agencies, and international organisations is crucial for effective AML/CFT measures, but information and resource-sharing lapses require strengthening collaboration.
Image source: AMT/CFT Compliance
Need for Comprehensive Approaches
A comprehensive, risk-based approach is needed to address legal and regulatory gaps in the AML/CFT framework, including updating legislation, enhancing compliance training, and promoting international cooperation.
Inadequacies in Legislation and Supervision
During the previous leadership of Desi Bouterse, Suriname's AML/CFT framework faced challenges due to outdated laws, insufficient enforcement, and inadequate oversight of financial institutions. These shortcomings hindered the country's ability to combat money laundering and terrorist financing, leaving the financial system vulnerable. Addressing these issues was crucial for strengthening international standards and enhancing financial sector integrity. The current administration under President Santokhi has curtailed some of the anomalies. However, the work is ongoing, and it might be a while before all the gaps are sealed off.
Overview of Suriname's AML/CFT Framework
Suriname faces challenges in its legal and regulatory framework for Anti-Money Laundering and Counter-Terrorist Financing despite efforts to align with international standards.
Legislative Gaps
The Caribbean Financial Action Task Force (CFATF) had criticised Suriname's legal framework in 2015 for being insufficiently robust to enforce financial crimes during the previous dictatorial regime of Desi Bouterse. This included insufficient laws for financial institution supervision and regulation, which hindered the execution of AML/CFT policies.
Image source: Legal hierarchy
Supervisory Capacity
Suriname's regulatory bodies face a significant supervisory capacity gap, hindering their effectiveness in AML and CFT mandates. A lack of technical expertise and trained personnel exacerbated this issue during the previous regime. Suriname was rated non-compliant or partially compliant, with 37 out of the 40 recommendations in 2014. Steps taken by the current leadership under Santokhi since 2020 have eliminated the issues and even achieved 14 out of 40 FATF recommendations.
Image source: Assessing AML risk
Targeted Financial Sanctions
The new framework has improved on the lack of provisions for implementing targeted financial sanctions, which are crucial for effectively addressing risks related to terrorism financing and other financial crimes. This has alleviated the country's ability to respond promptly.
Lack of Dedicated Funding and Support for the FIUS
Though the Santokhi government has done much work, Suriname's AML/CFT framework faces significant legal and regulatory gaps, including inadequate funding for its Financial Intelligence Units (FIUs). This lack of resources hinders their ability to investigate suspicious transactions, undermining their ability to combat money laundering and terrorist financing. The absence of strong political and institutional support further exacerbates the issue, leaving Suriname vulnerable to financial crimes and hindering compliance with international standards.
Financial Intelligence Unit (FIUS) Role in AML/CFT
The Financial Intelligence Unit of Suriname (FIUS) is a vital agency in the country's fight against money laundering and terrorist financing. It is responsible for collecting, analysing, and disseminating financial intelligence.
Constraints on Effectiveness
Despite its significance, the FIUS is significantly hindered by insufficient funding and support, which affects its ability to perform crucial tasks like intelligence gathering and analysis.
Image source: Financial intelligence unit
Impact of Insufficient Resources
During Desi’s tenure, insufficient budgetary support hindered the FIUS's ability to invest in advanced technologies and expand human resources. This led to performance gaps undermining Suriname's effectiveness in combating AML/CFT and financial crimes. The Suriname government under Santokhi is enhancing the legal framework for anti-money laundering and counter-terrorism financing by enacting a new law in November 2022 and proposing amendments to improve financial sector supervision and compliance.
Confiscation Limitations Due to Legal Restrictions
Suriname's outdated legislation during the previous regime created hurdles in the efficient confiscation of assets linked to money laundering and terrorist financing, allowing criminals to retain their gains and hindering efforts to disrupt financial crime networks.
Strengthening confiscation laws was crucial. In November 2022, the Suriname administration enacted a new AML/CFT law and amended related legislation to improve asset confiscation capabilities. The aim to close legal gaps and facilitate more efficient confiscation of money laundering and terrorist financing has rewarded the nation.
Confiscation and Asset Recovery in Suriname
Confiscation and asset recovery are crucial in Anti-Money Laundering and Counter-Terrorist Financing frameworks, but in Suriname, legal restrictions hinder confiscation of proceeds from criminal activities.
Limitations of the Legal Framework and Impact on Financial Crime Deterrence
The limitations in asset recovery were primarily due to procedural hurdles and outdated laws, which did not align with modern techniques and lacked regulatory provisions. Insufficient confiscation mechanisms hindered Suriname's effective deterrence and disruption of financial crimes. Criminals could access illicit funds, undermining the nation's AML/CFT efforts.
In November 2022, the Suriname administration introduced a new AML/CFT law and amended legislation to modernise techniques, enhance regulatory provisions, and improve asset recovery and confiscation mechanisms. The Santokhi government is committed to this ongoing process.
Image source: AML-CFT-Regulatory-Compliance
Incomplete Adoption of International Standards Regarding Terrorist Financing
Suriname, under Santokhi, has made efforts to combat terrorist financing risks, but the adoption of international standards is still incomplete. Since 2022, the new legal framework has phased out vulnerabilities for those seeking to finance terrorism. Yet, the absence of clear guidelines and comprehensive training for reporting entities further limits the effectiveness of the country’s TF measures.
Image source: FATF Explained | Global NPO Coalition on FATF (fatfplatform.org)
Image source: FATF Explained | Global NPO Coalition on FATF (fatfplatform.org)
Steps Taken Toward Addressing TF Risks
Suriname's legal framework lacks full incorporation of FATF recommendations, creating vulnerabilities for those financing terrorism despite efforts to combat terrorist financing risks.
Incomplete Legal Framework
The current legal framework has strengthened preventive measures, reporting obligations, and penalty provisions. However, it hinders the enforcement of effective counter-terrorism financing strategies, creating vulnerabilities that those financing terrorism could exploit. With time, the current government should be able to tackle this as well.
Image source: Internal factors
Lack of Guidelines and Training
Previously, Suriname's counter-terrorism financing (TF) measures were weakened by the absence of clear operational guidelines and comprehensive training for reporting entities. This limitation hampered the ability of authorities and institutions to identify and mitigate TF risks, undermining the effectiveness of the country's AML/CFT regime.
The government has taken steps to address the jurisdiction covered, including Mandatory and Voluntary Financial Sector Stability Assessments (FSSAs). These assessments, conducted by the International Monetary Fund, evaluate Suriname's financial regulations. Certain countries require Mandatory Financial Stability Assessments (FSAs), while voluntary assessments are conducted at the country's discretion or upon request. These evaluations help Suriname identify the strengths and weaknesses in its financial system.
Image source: Jurisdictions Covered: Mandatory and Voluntary FSSAs (November 2018-May 2023)
The Financial Sector Assessment Programs (FSAPs) for Suriname, conducted between 2018 and 2023, analysed the effectiveness of Suriname's Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) framework. They identified technical compliance deficiencies and potential risks to the international financial system and emphasised the need for regulatory improvements.
Image source: AML/CFT Issues Covered in FSAPs (November 2018-May 2023)
In recent years, the number of financial integrity-related conditions in Fund-supported programs for Suriname has risen. These measures target issues such as money laundering and financial governance, aiming to enhance Suriname's ability to combat corruption, strengthen its financial systems, and ensure fiscal stability in line with international standards for transparency and accountability.
Image source: The Number of Financial Integrity-Related Conditionality in Fund-Supported Programs Has Increased
During the COVID-19 pandemic, Suriname shifted its focus to beneficial ownership transparency in procurement processes. This was due to increased scrutiny of awarded contracts and reforms to clarify business ownership. These reforms improved accountability in government contracts and combat corruption. The focus on beneficial ownership transparency is linked to broader governance improvements in Suriname's financial and procurement sectors.
Suriname's financial integrity-related conditionality implementation rate has improved to 42% of structural benchmarks, indicating a stronger commitment to governance and compliance with anti-money laundering and financial regulations. This is part of a broader effort to restore fiscal stability and build resilience against financial crimes.
Image source: Implementation Rate of Financial Integrity-Related Conditionality
International organizations like the International Monetary Fund (IMF) and Inter-American Development Bank (IDB) provide funding for Anti-Money Laundering and Combating the Financing of Terrorism capacity development in Suriname. The funds help strengthen legal and regulatory frameworks, enhance institutional capacities, and implement reforms to improve compliance and effectiveness in combating financial crimes.
Image source: The Fund’s Work on Financial Integrity Issues
Suriname is implementing various research and thematic projects to improve its institutional capacity and tackle key challenges in areas like environmental management, public health, cultural heritage preservation, and social inclusion. These initiatives aim to promote sustainable development, mitigate environmental issues, and coordinate diaspora engagement for social and economic welfare.
Image source: Thematic and Research-Related Projects
The AML/CFT Technical Assistance and Training Framework project modules for Suriname from FY2019 to FY2023 aim to improve the country's compliance with FATF standards in anti-money laundering and terrorism financing. These modules provide technical assistance, training, and institutional capacity in the financial and regulatory sectors.
Image source: Capacity Development Themes
The Fund's policies in Suriname prioritise Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) measures to protect the financial system's integrity and promote economic stability. Enhanced compliance facilitates international financing and investment, aiding Suriname's economic recovery and growth. Addressing AML/CFT deficiencies aligns with the Fund's objectives, improving the investment climate and institutional capacity.
Image source: AML/CFT Strategy
The Fund is a key player in the global Anti-Money Laundering and Combating the Financing of Terrorism framework. It provides policy advice, technical assistance, and capacity development to its member countries. It actively participates in the Financial Action Task Force and regional bodies, identifying weaknesses and supporting reforms to combat financial crimes.
Image source: IMF Report 2023
Non-Profit Organisations (NPOs) Risks
Suriname's AML/CFT framework has significant legal and regulatory gaps in its Non-Profit Organisations (NPOs), making them vulnerable to misuse for money laundering and terrorist financing. The absence of stringent requirements, lack of coordination, and limited enforcement capabilities further weaken the oversight, allowing NPOs to funnel illicit funds without detection.
Challenges in Implementing Targeted Financial Sanctions
Suriname faces challenges in implementing targeted financial sanctions (TFS) to counter terrorism and proliferation financing due to the lack of a coherent framework, creating legal and procedural gaps that can lead to undetected compliance and enforcement breaches.
Image source: Risk profile
Inadequate Addressing of NPO Risks
Suriname's regulatory framework lacks sufficient management of Non-Profit Organizations, which may be vulnerable to terrorist financing. This leads to a regulatory blind spot in the country's Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) framework, complicating efforts to mitigate TF risks effectively.
Recommendations
Based on the existing scenario and to address the legal and regulatory gaps in Suriname’s AML/CFT Framework, here are some recommendations:
Legislative Reforms
Suriname should draft critical laws to address gaps in its AML/CFT framework, including clearer definitions, strengthened customer due diligence measures, and compliance with FATF Recommendations. These could be increased from the current 14 out of 40.
Strengthening Institutional Capacity
The government should enhance the capacity of authorities like the Financial Intelligence Unit and the Central Bank of Suriname by providing adequate staff training and developing comprehensive supervision procedures to ensure adherence to AML/CFT regulations.
Collaboration with International Organisations
Suriname should elevate its engagement with international organisations like the Financial Action Task Force (FATF) and the Egmont Group to enhance financial intelligence sharing and strengthen its AML/CFT measures through peer learning and assistance.
Implementing a Risk-based Approach
Suriname should implement a robust risk-based approach for its AML/CFT framework, identifying and analysing risks related to money laundering and terrorism financing, enabling effective resource allocation, and tailoring measures to address vulnerabilities.
Enhancing Public Awareness and Education
Increasing public awareness about money laundering and terrorism financing is crucial, and education programs that educate financial institutions, non-financial businesses, and professions about compliance measures can foster a culture of compliance and deter illicit activities.
Continuous Monitoring and Evaluation
Suriname should implement continuous monitoring and evaluation of its AML/CFT framework, regularly update risk assessments, and adapt legal and regulatory measures to address emerging threats and best practices.
Conclusion
Suriname's AML/CFT framework has seen improvements recognised by CFATF. Yet significant legal provisions and regulatory practices remain deficient, hindering effective implementation. The country must address legislative inadequacies and improve supervision to strengthen its AML/CFT framework while providing adequate funding and resources to critical institutions like Financial Intelligence Units, which are crucial for effective operations and compliance monitoring.
Suriname requires a comprehensive strategy to combat terrorist financing, including enhanced financial sanctions enforcement and nonprofit sector risks, to develop a robust AML/CFT system. The Santokhi administration is committed to working on these issues.
To be on the development path, Suriname has to remove thorns and weeds. Money laundering and terrorist financing are obstacles and must be rooted out. All efforts by stakeholders, including the public, should focus on a better future. Achieving success is never easy, but who has ever tasted it without overcoming significant challenges? The fight is worth the trouble for the sake of current and future generations.
Explore Our Archive of Surname-related Articles:
- Dilip Sardjoe: The Business Socialist Who Shaped Suriname’s Economy and Politics
- Celebrating Powerful Women of Suriname: Figures Who Are Making a Difference
- Strengthening Financial Integrity: The Santokhi Administration’s AML/CFT Initiatives in Suriname
- Overview of Suriname’s AML/CFT Measures and Key Findings
- How Globalization is Shaping Business Culture in Suriname
- AML/CFT in Suriname: Challenges Faced by Financial Intelligence and Investigative Systems under President Santokhi
