AML/CFT in Suriname: Challenges Faced by Financial Intelligence and Investigative Systems under President Santokhi

Suriname, a South American nation, is enhancing its anti-money laundering (AML) efforts under President Chandrikapersad Santokhi's leadership. Since 2020, the administration has focused on improving enforcement measures and regulations to reduce reliance on a cash-based economy and create a more transparent and robust financial system.

Suriname was removed from the grey list in November 2021 due to successful reforms and strategic deficiencies in its AML/CFT system by the Financial Action Task Force (FATF), avoiding negative financial and economic implications. The country is added to the "grey list" for heightened monitoring for money laundering and terrorism financing, requiring reforms to avoid further penalties or blacklisting.

Image source: Suriname’s President Santokhi

Let us dive deep into the details.

Suriname's Financial Intelligence and Investigation faces challenges in combating money laundering and terrorist financing due to limited resources, insufficient technical expertise, and interagency cooperation. These issues hinder monitoring, detecting, and investigating suspicious financial activities. To overcome these obstacles, Suriname must enhance training, improve coordination among authorities, and strengthen its legal and regulatory frameworks.

This article will explore these challenges, examine how they impact Suriname's ability to meet global AML/CFT standards, and suggest solutions for improving this.

Financial Intelligence

Financial intelligence involves systematically collecting, analysing, and disseminating information about financial transactions linked to criminal activities. Financial institutions and government agencies must detect, prevent, and investigate suspicious activities.

Suriname faces significant financial crimes, particularly corruption and money laundering. Corruption is pervasive across government institutions and economic transactions, and high-ranking officials have been investigated and prosecuted for financial crimes. Money laundering is a significant issue, with notable cases involving the central bank and finance ministry. Efforts to combat these issues are ongoing.

CO: Compliance Officer, Meldplicht OTRs: Reporting Obligation for Unusual Transactions (OTRs)’, CDD Maatregelen & Bewaarplicht: Customer Due Diligence measures & Retention Obligation, RBA: Risk-Based Approach

Image source: FIU Suriname

Importance in Decision-Making

Financial intelligence is crucial in decision-making. It enables individuals and organisations to evaluate investment opportunities, manage risks, align financial goals with strategic planning, improve forecasting and resource allocation, and enhance financial outcomes and competitiveness.

FIUS: Financial Intelligence Unit Suriname: FOT: Financial Investigations Team

Image source: FOT requests for financial intelligence

Table 3.3 reflects the 17 requests made to the FIUS by the FOT. Two of those requests resulted in successful prosecution and sentencing, and another resulted in money laundering (ML) investigations on the Prosecutor General’s (PG's) instructions.

Enhancing Financial Literacy

Financial intelligence enhances financial literacy, enabling individuals to comprehend complex financial concepts, analyse data, understand risks, and make informed decisions about short-term and long-term objectives.

Image source: Subjective UTRs analysed

The graph displays the number of Subjective Unusual Transaction Reports (UTRs) filed and analysed in Suriname from 2017 to 2021. The blue bars represent the number of UTRs filed, while the orange bars represent the number of UTRs analysed annually. Over the years, the number of UTRs filed has increased significantly, with a dramatic spike in 2021, where the filings exceeded 2,500.

However, the number of UTRs analysed remains relatively steady, with a slight increase. This indicates that despite the sharp rise in filings, the capacity or resources to analyse these reports may not have kept pace.

Application Across Different Sectors

Financial intelligence is applicable across various sectors, such as personal finance, corporate finance, and non-profit organisations. It helps stakeholders understand financial performance evaluation and the factors influencing it, enabling better financial management practices and sustainable growth.

Tools and Resources

Financial intelligence is crucial for individuals and businesses to develop financial skills, adapt to changing financial landscapes, and seize emerging opportunities by utilising financial software, analytical models, and educational materials.

The objective is to establish an efficient FIU, increase awareness of ML and TF activities, ensure compliance by responsible institutions, and foster cooperation within regional and international contexts.

FIU Suriname collects, analyses, and disseminates financial intelligence to relevant authorities. The Central Bank of Suriname supervises it and grants it legal authority to request information from financial institutions.

MLA: Mutual Legal Assistance

Image source: MLA and extradition requests received by FOT (2017-2021)

Issues in Access to Financial Intelligence and Investigations

Suriname faces challenges in its fight against money laundering (ML) and terrorist financing (TF). The Caribbean Financial Action Task Force (CFATF) Mutual Evaluation Report highlights several issues:

The Financial Intelligence Unit of Suriname (FIUS) and law enforcement agencies struggle to access crucial financial data due to resource constraints.

FI: Financial institutions; DNFBP: Designated Non-Financial Businesses and Professionals

Financial institutions

Even when data is accessible, it is often underutilised. This leads to missed opportunities to identify and prosecute financial crimes.

Image source: Total financial institutions

Ineffective coordination and collaboration between agencies hinder investigations, making it difficult for Suriname to fully address ML and TF threats. Addressing these challenges is crucial for enhancing Suriname's ability to combat financial crimes effectively.

Resource Shortages and Limitations in Financial Intelligence Usage

Suriname's financial intelligence system faces critical challenges due to resource constraints. Here are the key issues:

Underfunding: The Financial Intelligence Unit (FIU) and law enforcement agencies lack sufficient funding. This affects their ability to conduct thorough financial investigations.

Outdated Infrastructure: The system is hampered by an outdated technological infrastructure, which hinders efficient data analysis and intelligence generation.

Image source: FIUS analysis: UTRs filed and disseminated

FIU: Financial Intelligence Unit; UTR: Unusual Transaction Report; PG: Procurator General

The Procurator General is a top legal official responsible for prosecution and oversight, particularly in the context of AML/CFT, ensuring adequate implementation and enforcement of legislative measures against money laundering and terrorism financing.

Personnel Shortage: Insufficient personnel exacerbates the issue, making it challenging to analyse Suspicious Transaction Reports (STRs).

Limited Data Utilization: The insufficient use of financial data hinders the efficient tracking of money flows and the identification of criminal networks.

Addressing these gaps is crucial for strengthening Suriname's Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) efforts.

Technical Challenges and Lack of Training for Law Enforcement and FIUS

Suriname faces technical challenges in its financial investigative capabilities:

Lack of Advanced Technology: The Financial Institutions Unit (FIU) and enforcement bodies lack advanced systems for handling and analysing large amounts of financial data.

Personnel Skills Gap: Insufficient training in specialised areas like forensic accounting, cybercrime, and virtual asset management hinders the effectiveness of financial investigations, especially in complex or cross-border cases.

Resource Constraints: Insufficient funding for financial intelligence units (FIUs) and law enforcement agencies leads to outdated technology and insufficient staffing.

Image source: Dissemination by the FIUs

Suriname needs to enhance its AML/CFT framework by investing in resources, upgrading technology, and improving personnel training. It should also prioritise financial crime investigations and enhance agency coordination.

Licensing

Suriname's AML/CFT framework relies on licensing to ensure only qualified entities can operate in the financial sector. This process maintains high due diligence and monitoring standards, reducing the risk of money laundering and terrorist financing. Regulatory authorities can approve entities based on their adherence to regulations, enhancing sectoral compliance. The licensing procedure also provides ongoing supervision and enforcement, ensuring compliance with evolving standards. This structured approach builds a robust financial system to mitigate financial crime risks.

Suriname is enhancing its Anti-Money Laundering and Counterfinancing of Terrorism (AML/CFT) regime by enhancing licensing requirements. To ensure compliance, the country has 11 licensed banks, 17 exchange organisations, and six authorised money transfer operators. Regulations are tightened to restrict or revoke licenses for non-compliance, a crucial step in combating financial crimes. Suriname is also addressing technical deficiencies through ongoing reforms and international cooperation.

Image source: Suriname Licensing

Financial institutions use Suriname's pension funds to manage retirement savings for employees and individuals. They collect contributions, invest these funds, and provide pension benefits upon retirement. These funds, involving public and private sector workers, ensure financial security in old age. The Surinamese government also operates a national pension scheme.

Case example

Case example

Compliance Rating

The Central Bank van Suriname (CBvS) understands the ML/TF risks of supervised institutions in the banking sector using a self-assessment matrix, integrity matrix, and compliance rating model. It uses the AML/CFT self-assessment, integrity matrix, and compliance rating model to determine compliance ratings.

The AML/CFT risk profile assessments, on-site inspections, and off-site monitoring assign compliance ratings to individual banks. These ratings are based on the nature and extent of deficiencies in the bank's AML/CFT compliance function, ranging from Compliant to Non-Compliant. The assessments consider the entity's controls and procedures to mitigate risk.

Image source: Overall Compliance Rating - Banks in Suriname

Inspections

Money Transfer Offices and EOs use off-site inspection results for license renewal and branch expansion applications. Inspection results are also considered for bank branch applications. Special Foreign Exchange Commission Decisions or Licences may include outstanding inspection matters. After meeting recommendations, affiliates can process their applications.

FI: Financial institutions

Image source: Inspections conducted

Fitness and propriety

"Fitness and propriety" refers to the standards and criteria used in banking supervision to evaluate the suitability of individuals in key positions within financial institutions, especially in combating money laundering and countering terrorism financing.

Image source: Summary of Fitness and Propriety - Banking Supervision Division- Suriname

To be a successful financial institution, an individual must demonstrate integrity, strong moral principles, and a clean record of financial crimes and fraud. They must also have the necessary skills and experience to perform their duties effectively, especially in compliance with AML/CFT regulations. Financial soundness is crucial, as distressed individuals may be more susceptible to unethical behaviour. A negative reputation can undermine trust in the institution's compliance.

Image source: Rejection of Fit and Propriety Application

Fitness and propriety checks are crucial in the AML/CFT context to ensure the competence and trustworthiness of those overseeing measures, prevent money laundering or terrorist financing, monitor transactions, identify suspicious activities, ensure compliance with local and international regulations, maintain financial institution integrity, and avoid legal penalties.

Politically Exposed People (PEP)

A "Politically Exposed Person" (PEP) is an individual with a prominent public position or past one who is considered at higher risk in Anti-Money Laundering (AML) and Countering the Financing of Terrorism due to their influence and access to resources. They are potentially involved in corruption or terrorist financing.

Due to their power and influence, PEPs, or Power of Persons, are at a higher risk of corruption. Financial institutions must apply enhanced due diligence (EDD) when dealing with PEPs, which involves more stringent checks and ongoing monitoring. This includes obtaining senior management approval, establishing wealth sources and funds in business relationships, and conducting enhanced ongoing monitoring to detect unusual or suspicious transactions. This ensures the integrity of financial transactions and prevents potential corruption.

Financial institutions must report suspicious activities related to PEPs to the relevant financial intelligence unit (FIU), as unusual transactions could be linked to money laundering or terrorist financing. International bodies like the Financial Action Task Force provide guidelines on handling PEPs.

Surnames can indicate potential PEP status, especially if linked to political families or dynasties. Financial institutions assess customer PEP status based on role, connections, and financial behaviour. They must have systems to identify and monitor PEPs, assess risks, and apply due diligence measures to avoid regulatory penalties, reputational damage, and increased financial crime risk.

Cases

Real-life cases provide insight into the seriousness and complexity of societal issues, allowing even ordinary citizens to understand their role in society and their potential contributions to its progress. Let us look at some cases.

Suriname has made initial steps to assess its AML/CFT risks, but more work is needed to create a robust framework. Strengthening the scope of risk assessments and addressing identified deficiencies will enhance the regime's effectiveness.

FIUS: Financial Intelligence Unit Suriname, FOT: Financial Investigations Team; OvJ: Public Prosecutors Office

Image source: Investigation triggered by financial intelligence from FIUs

Public Prosecutors Office

Image source: ML investigation by FOT

Image source: ’Summary of case ‘brainbrood’

Image source: Case example

Inefficiency of Case Identification and Low Priority for Money Laundering Investigations

In Suriname, inefficiencies in case identification and prioritisation pose significant challenges in the financial intelligence system:

Deprioritisation of Money Laundering Cases: Money laundering cases are often given lower priority compared to other criminal activities, resulting in missed opportunities for effective investigation.

Underemphasis on Financial Trails: Law enforcement agencies focus less on following financial trails, leading to low prosecution rates and weak enforcement outcomes.

Lack of Clear Procedures: The absence of clear guidelines for managing financial crime cases exacerbates inefficiencies and investigation delays.

Addressing these issues is crucial for improving Suriname's financial crime prevention efforts.

Skills Required for Financial Intelligence

Financial intelligence is a must-have to tackle AML/CFT issues. So are the skills associated with it. Developing financial intelligence requires a combination of analytical, technical, and investigative skills:

Data Analysis and Interpretation: The analysis and interpretation of financial data are crucial for detecting suspicious activities and understanding financial trends.

Knowledge of Financial Systems and Regulations: Understanding financial systems, products, and relevant laws, such as anti-money laundering (AML) laws, is crucial for recognising compliance issues and potential financial crimes.

Critical Thinking and Problem-Solving: Professionals with critical thinking and problem-solving skills can evaluate unusual financial activities critically, draw conclusions, and develop risk mitigation strategies.

Attention to Detail: Attention to detail is crucial in scrutinising financial documents, records, and reports to detect discrepancies, irregularities, and potential fraud.

Communication Skills: Communication skills are crucial for effectively sharing findings with stakeholders, including law enforcement and regulatory bodies, in written reports and oral presentations.

Technological Proficiency: Technological proficiency is crucial for managing and analysing large volumes of financial data, requiring expertise in financial software, data analytics tools, and cybersecurity measures.

Legal and Ethical Awareness: Legal and ethical awareness is vital for safeguarding the integrity of financial systems. Understanding the legal implications of financial activities is essential.

When directed comprehensively, the above skills will enhance manpower and could lead to adept techniques to combat antisocial practices related to money laundering and terrorism.

Conclusion

Financial intelligence is critical to effective decision-making in both personal and business contexts. It encompasses the skills and knowledge necessary to understand financial data, analyse economic trends, and make informed choices that enhance financial performance and stability, leading to economic growth.

Due to limited resources and capacity within financial oversight agencies, Suriname's financial intelligence and investigative systems face challenges in combating financial crimes like money laundering, fraud, and corruption. The sharp increase in Unusual Transaction Reports (UTRs) contrasts with a stable rate of analysed reports, indicating a potential bottleneck in processing and evaluating these reports. Financial literacy in authority circles could be enhanced.

Suriname’s business landscape, place in the world, and economic prosperity heavily depend on curbing money laundering and terrorism. Finance needs proper channelling for equitable, inclusive growth, and Suriname has the potential to achieve it. The current administration is in the right direction and is geared to uplift the nation.

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