This article is part of a series on Anti-money Laundering (AML) and Combating the Financing of Terrorism (CFT) in Suriname, South America. The topic is significant for the continent and the world since crucial lessons must be learned in our consistently shrinking globalised world. It also aligns with the motto of our portal, ‘A better world with one conversation at a time.’
It should be noted that this piece will be published in the LA Times in November 2024 (via Suriname Month with One World Media and G-Audio collaboration).
Suriname has been added to the Financial Action Task Force's "grey list" in 2018 due to deficiencies in its Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) frameworks. The country has committed to addressing these issues and strengthening its legal and institutional frameworks to meet FATF standards, ensuring the country's compliance with the organisation's standards.
Suriname was removed from the grey list in November 2021 due to the successful implementation of reforms and strategic deficiencies in its AML/CFT system by the FATF, thereby avoiding negative financial and economic implications associated with being on the grey list. We thought it imperative to get on-the-ground perspectives on the matter, which has large-scale consequences for the country's economic growth and, specifically, its poor.
The reader needs to know that this piece is informed by the firsthand insights and experiences of our Chief Explorer, Rajan Nazran, who was in Surname for a month in 2024. His conversations included:
- President of Suriname (President Chandrikapersad Santokhi)
- Ministry of Finance and Planning (Stanley Raghoebarsing)
- Governor of the Central Bank (Maurice Roemer)
- Senior Executives of DSB Bank
- CEO of Finabank (Eblein George Frangie)
- CEO of NOB (National Development Bank) - Sandy Cameron
Unfortunately, a meeting with the CEO of the Islamic Bank of Suriname did not materialise. He also had unofficial discussions with executives of companies and institutions involved in Oil & Gas and financial crimes. In addition, he engaged in conversations with officials from anti-money laundering institutions in the United Kingdom and the United States.
Let’s begin with the broader context of this often-overlooked country, rich in activity beneath the surface.
Suriname gained independence from the Netherlands in 1975 as a plantation colony. It strives for stability and growth despite political upheavals, including military coups. As one of the smallest countries in South America, Suriname covers an area of 163,820 square kilometres and will have a population of 645,300 in 2024.
Suriname, bordered by the North Atlantic Ocean, Guyana, Brazil, and French Guiana, has a highly ethnically diverse population of South Asians, Creoles, Javanese, African, Chinese, Indian, and Dutch descent. The capital city is Paramaribo, located on the Suriname River. The official language is Dutch, and regional languages like Sranan Tongo are also spoken.
Suriname is a multiparty democratic republic with a presidential system. Chan Santokhi is the current president. After years of military rule, Suriname reverted to civilian governance.
Image source: Suriname.jpg (1700×1410) (map-rus.com)
Suriname's economy relies heavily on its natural resources, particularly bauxite, gold, oil, and agriculture. Major exports include rice, bananas, and shrimp. However, sectors like bauxite mining have faced a decline, prompting efforts for economic diversification.
Suriname's culture is characterised by ethnic diversity, reflected in its cuisine, music, and festivals. It is known for blending various traditions, making it a vibrant cultural tapestry.
Quick History of Suriname
Suriname is a small country with limited global influence. Its low-key foreign relations focus on regional ties between the Caribbean Community (CARICOM) and South American neighbours. Suriname rarely makes international headlines.
Suriname, located between South America and Europe, has been seen in the past as being a hub for drug trafficking, particularly cocaine, due to its location. The country has been used as a transit point for drugs from South American producers to European markets. Former president Desi Bouterse of the National Democratic Party (NDP) was convicted in absentia for drug trafficking in 1999. He led Suriname during two distinct periods: first as a military dictator from 1980 to 1987 and later as the democratically elected president from 2010 to 2020.
Image source: World Risk Map (interactive)
The December Murders of 1982, a dark chapter in Suriname's history, resulted in the execution of 15 political opponents under Desi Bouterse's military regime, leading to widespread condemnation and long-standing human rights concerns, despite Bouterse's later serving again as president from National Democratic Party (NDP).
Suriname in the past faced significant challenges due to high levels of corruption. This affected the country's development and caused inefficiencies in the government and business sectors, leading to a stark deficit of trust in public institutions.
The illegal gold mining industry in Suriname has caused significant environmental damage, including deforestation, the use of cyanide, and mercury pollution in rivers, affecting the health and livelihoods of Indigenous communities and others in the interior of the country.
Image source: Illegal gold mining industry in Suriname
Suriname's economy, heavily reliant on commodity exports like gold, oil, and bauxite, was plagued by economic mismanagement and corruption. This leads to financial crises, heavy debt, and a poor global economic reputation.
Economic Overview - Changing Tides
Suriname, a middle-income country, transitioned to agriculture and mining after independence, with gold mining becoming a key sector. Political turmoil and military coups influenced economic growth and crises from the 1980s to the 2000s. High commodity prices in the early 2000s boosted foreign investment, leading to a 4.4% annual growth rate. However, falling commodity prices in 2015 and a fiscal crisis worsened by COVID-19 in 2020 resulted in a 16.0% GDP contraction, increased unemployment, and poverty.
Strong economic growth, averaging 4.4%, was recorded from 2001 to 2014, mainly due to favorable commodity prices, which made the country one of the fastest-growing economies in Latin America and the Caribbean, with Gross Domestic Product (GDP) per capita rising to US$9,850 in 2014 and a decline in poverty rates. (Source: Suriname Overview: Development news, research, data | World Bank)
Image source: What is Money Laundering? (investopedia.com)
Dési Bouterse’s leadership period under the National Democratic Party (NDP) 2010-2020
Suriname position as per Freedom House's Democracy Index 2019
Suriname position as per V-Dem in 2019
Suriname: Freedom in the World 2020 Country Report | Freedom House
Suriname, a constitutional democracy with generally free and fair elections, has maintained its "Free" status in Freedom House's rankings from 2014-2023 despite significant governance issues affecting the country's constitutional democracy.
The 2023 report highlights issues of corruption and clientelism in Suriname's political landscape, which, in our opinion, could be due to coalition partnerships. We believe that because of the coalition, questions surrounding the rule of law and diminishing public trust in political institutions highlight the need for secure governance and the safeguarding of the electoral process.
In 2020, President Chandrikapersad Santokhi led a new government that promised to combat corruption and improve transparency. However, this was initiated by a loose coalition. Despite attempts to enforce the anti-corruption measures, including an anticorruption unit and graft investigations, challenges still persist in their implementation and effectiveness.
The judicial system's impartiality is under scrutiny due to the coalition's influence over appointments, despite some improvements in certain areas, raising questions about its ability to regulate government power effectively. The political opposition environment is characterised by intimidation and violence, especially in the lead-up to elections, which undermines democratic processes and heightens concerns about the political system's fairness.
Image source: Suriname Financial Stability Report 2023
Recovery Efforts and Recent Developments (2021 - Present)
The Santokhi administration, along with its coalition, took office in 2020 to address Suriname's severe economic crisis, which included a high fiscal deficit, rising public debt, inflation, and a collapsing currency. In 2022, Suriname's economy showed signs of recovery, with a 2.4% expansion in real GDP. The government is focusing on macroeconomic stabilization through fiscal reforms and debt restructuring. Offshore oil deposits in 2020 offer potential for long-term recovery.
The Santokhi administration reduced public spending in 2020 to 30.2% to address the fiscal deficit despite a drop in revenues due to economic contraction. In 2021 and 2022, the administration continued prudent fiscal management, reducing the deficit and public debt. The government signed an Extended Arrangement with the IMF for financial support and reforms.
The government has experienced economic recovery through fiscal adjustments, economic activity recovery, and mineral price recovery, leading to increased revenues and reduced fiscal deficits. The exchange rate has appreciated by 23% in the last 12 months, and monthly inflation has decreased from 10% to 0.2%.
The IMF's excessive conditionalities, including further fiscal deficit reductions, could impact political support for the Santokhi administration and lead to populist policies. They suggest acknowledging the fiscal adjustment already made by the Santokhi administration.
The current administration’s efforts are paying off. Suriname's national debt decreased by 6% in Q1 2024, reaching SRD 118.4 billion (USD 3.4 billion) due to reduced demand for foreign currency and competitive activities among cambio holders.
Image source: AML/CFT
Economic Vulnerabilities and Outlook
Suriname's economy is vulnerable due to its heavy reliance on the extractive sector, which limits economic diversification and poses risks to sustainable growth. Strengthening governance and enhancing human capital is crucial for improving resilience and long-term economic stability.
Suriname's correspondent banking system, involving local banks and international financial institutions, facilitates cross-border transactions and global financial services. However, challenges related to de-risking have prompted some international banks to terminate correspondent relationships due to concerns over financial transparency and regulatory compliance issues.
Image source: Correspondent banking
Poverty in Suriname
In the country's interior, an estimated 27 percent of the population lives below the World Bank’s upper middle-income poverty line of US$6.85 (2017 PPP), and 72 percent lives in multidimensional poverty. In contrast, monetary and multidimensional poverty rates are lower (and fairly similar) in the Greater Paramaribo region and the other coastal areas of the country at about 17 and 43 percent, respectively (Source: World Bank Document). Around 1.1% of Surinamese live in extreme poverty, subsisting on less than $2.15 daily.
Suriname's Social Protection System
The social protection system provides social insurance, social assistance, and services to various demographic groups, including children, the elderly, and vulnerable households. In 2014, reforms introduced minimum packages for vulnerable groups, including free healthcare and financial benefits. The government established an Emergency Fund during COVID-19 to support vulnerable populations, and the General Child Benefit program reduces poverty.
Suriname's government is focusing on expanding and upgrading social safety net programs to combat poverty and provide assistance to vulnerable populations. In 2022, the government introduced an SRD400 million Emergency Fund to finance social support measures during the pandemic. Suriname is partnering with international organizations like the World Bank and the Inter-American Development Bank (IDB) to enhance poverty reduction strategies, emphasizing the need to improve social assistance programs, develop skills and education, and ensure recovery benefits reach the needy.
Political Context of AML/CFT
Suriname's AML framework faces challenges due to political factors and institutional weaknesses. In 2015, the Caribbean Financial Action Task Force identified strategic deficiencies in the regime, exacerbated by a lack of transparency in procurement practices, especially in extractive industries like oil and gold. Addressing these deficiencies requires international cooperation and grappling with internal corruption, which undermines regulatory efficacy.
Premises of Crimes
Crimes in today’s world are multifaceted. The more globalised we are, the more global the reach prospects. We will explore some underlying factors for crimes in Suriname.
Migrants - Human Trafficking
Suriname is a major destination for human trafficking due to the influx of irregular migrants from the Caribbean, Brazil, Haiti, and Venezuela. Victims are recruited into clubs and subjected to forced labour, prostitution, and sexual exploitation. International human trafficking networks work through local ethnic groups, with Chinese and Hong Kong-based groups trafficking migrant workers for gold mines and service-based professions.
Arms
Suriname is a major transit hub for arms trafficking, primarily controlled by Brazilian organised groups like PCC and CV. Criminal actors in arms trafficking rely on international networks, local connections, and corrupt government officials. Arms smuggling is closely related to drug trafficking, likely enabled by former government members. Venezuelan weapons also enter Suriname through cocaine and gold trafficking intermediaries.
Environment
Illicit logging in Suriname, primarily by tribal communities, is driven by poverty and non-organized companies. The former government, particularly Bouterse's inner circle, controlled much of this logging. Suriname is a major hub for wildlife crimes, including jaguar poaching and turtle egg poaching. Chinese international networks exploit tribal populations.
Suriname is a major gold miner's territory, with informal and formal operations subcontracting artisanal miners. Most are Brazilian, but local tribes also participate. Low tax and paperwork requirements have led to a significant portion of artisanal gold being trafficked, sold, and exported. Illegal gold mining in Suriname and Guyana causes violence, deforestation, and pollution.
Drugs and Ports
Suriname's strategic location and geographical features contribute to drug trafficking, with its ports frequently used for cocaine smuggling. Criminal organisations exploit this infrastructure, compromising port authorities and customs officials.
Cocaine seizures in Latin America and the Caribbean
US and Colombian investigators have linked Suriname's Vice President Ronnie Brunswijk and former President Desi Bouterse to drug trafficking, indicating ongoing political links to organized crime in South America's smallest country.
In 2023, Suriname's ports seized only 125 kilograms of cocaine, possibly due to corruption rather than reduced trafficking activity, unlike the significant seizures in 2019 when over 2,300 kilograms were seized. Suriname's efforts to enhance port security and combat drug trafficking, including joining the Caribbean Port Security Program in 2012, have been hindered by corruption within local law enforcement.
See the interview with President Santokhi here.
Criminal Actors
Suriname, a major drug hub, has been accused of high criminal market patronage due to former president Bouterse's involvement in organised crime, terrorism support, and illegal access to profits. Corruption has permeated government levels, and the new administration's potential to change this perception remains uncertain. Foreign criminal organisations from Guianas, Colombia, Bolivia, Peru, and Brazil also have a presence in the country.
Suriname has two types of domestic criminal networks: smaller groups and larger illicit supply chains. The former may operate abroad or collaborate with Brazil or the Guianas, while the latter smuggles small illegal commodities.
Leadership and Governance
Chan Santokhi took over the presidency in July 2020 after a decade-long Bouterse rule marked by corruption and state involvement in organised crime. The new leadership has had to work with the inherited state of corruption of the former convicted (murder) leadership. The outstanding amount is close to 1 billion USD, some in the form of foreign debt. Despite disrupting cocaine flows, he faces challenges in implementing policy changes due to state corruption, limited coalition support, and a vice president wanted by INTERPOL.
Suriname lacks adequate anti-corruption legislation and has poor access to information. However, efforts in the last three years have led to lower levels of corruption.
Corruption risks in Suriname - 2017 (read the full UNDP report)
Corruption Perception in Suriname (Source: Statista)
Image source: Suriname - Freedom score
Suriname, a member of organised crime treaties, has received significant international support for capacity-building financial and technical assistance. However, the country lacks crucial mechanisms against organised crime due to its penal code's lack of organised crime-specific legislation. Despite cannabis being illegal, police do not enforce regulations in public places. Legalisation reforms are underway, resulting in an outdated, unenforced, and weak legal framework for criminal scams.
Criminal Justice and Security
The new Suriname governing coalition aims to reform the judiciary and strengthen independence by granting it its budget, improving prosecution services, and appointing special prosecutors to tackle corruption cases. However, challenges include corruption, under-resourced law enforcement, personnel shortages, low salaries, insufficient coordination, and inadequate training and equipment. Most units are based in Paramaribo.
Economic and Financial Involvement
Suriname is grappling with significant financial crimes and corruption, with high-ranking government officials being investigated for embezzlement and money laundering. The central bank governor and finance minister were charged with stealing $200 million, affecting domestic and foreign business transactions.
Suriname's financial intelligence unit and police force combat money laundering, but transparency in asset administration is lacking. The country's gold-trafficking hub creates opportunities for criminal proceeds laundering, protected by influential individuals. The weak state's protections and regulatory capacity make legitimate businesses vulnerable to government influence.
Civil Society and Social Protection
Suriname has made efforts to support victims and witnesses but still struggles with tackling human trafficking and providing adequate support. Despite strategies for drug use, money laundering, and corruption, these have yielded little results due to rampant corruption and organised crime. Civil society is robust, but few NGOs focus on organised crime-related issues due to government approval and funding. The media environment is generally free of political interference, but a defamation law enforces self-censorship, particularly on Bouterse and his inner circle.
International Position in AML/CFT
Suriname's performance in Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) is reflected in various international ratings and rankings.
Basel AML Index: Suriname's AML/CFT measures and effectiveness were ranked 16th globally in the 2023 Basel AML Index, indicating a moderate risk of money laundering and terrorist financing.
Financial Action Task Force (FATF) Compliance: Suriname has been rated Compliant or Largely Compliant with 14 out of 40 FATF Recommendations, indicating its commitment to enhancing its AML/CFT framework.
Egmont Group Membership: Suriname is a member of the Egmont Group, which includes Financial Intelligence Units from various countries, demonstrating its involvement in international cooperation against financial crimes.
Relation Between Economy and Financial Fraud in Suriname
There is a direct relationship between a nation's economy and crime. Suriname has its share of woes.
Image source: Money laundering stages
Impact of Financial Fraud on Economic Performance
Financial fraud, corruption scandals, and misappropriation of funds have negatively impacted Suriname's economic performance. Substantial losses in government revenue have exacerbated the fiscal crisis since 2015. Investment in infrastructure and social services has also been hindered, contributing to economic stagnation and declining living standards.
Vulnerability of the Economy to External Shocks
Suriname's economy, heavily reliant on commodity exports like gold and oil, is vulnerable to global price fluctuations. Political instability has led to financial fraud, weakening the government's ability to respond effectively to economic downturns. The lack of financial integrity and transparency in governance made it difficult to absorb shocks, resulting in a GDP contraction after the 2015 commodity price decline.
Image source: Suriname currency - Surinamese dollar, abbreviated as SRD
Relationship Between Corruption and Foreign Investment
Image source: Money laundering and terrorist financing
Suriname's financial fraud and corruption have hindered foreign investment, affecting economic growth. Investors avoid weak governance and corruption, fearing potential losses. This aversion has hindered economic diversification and limited capital inflow for development in various sectors, affecting economic diversification efforts.
Image source: Suriname: Corruption Perceptions—Transparency International
Mutual Legal Assistance (MLA)
Mutual Legal Assistance (MLA) refers to the process by which countries cooperate to assist in the investigation and prosecution of criminal activities, including gathering and exchanging information, obtaining evidence, and executing requests for actions such as searches and seizures related to criminal cases, particularly in areas like money laundering and counter-terrorism financing.
Image source: Suriname 4th Round MER (cfatf-gafic.org)
Between 2017 and 2021, Suriname received 75 MLA requests from foreign countries for money laundering investigations, with the Netherlands and Belgium being the main recipients. The highest number was 24 in 2018, all from the Netherlands. Requests decreased over time, with the lowest being 8 in 2021.
Government Response to Financial Fraud
The Surinamese government has implemented reforms to combat financial fraud and corruption, collaborating with international organisations like the International Monetary Fund (IMF) to secure financial support and implement macroeconomic stabilisation measures. Despite efforts to rebuild trust and attract investors, high inflation and ongoing fiscal challenges pose significant concerns.
Long-term Implications
Image source: Suriname risk report
Financial fraud in Suriname has severe long-term economic impacts, undermining public confidence and policy implementation. The cyclical nature of fraud complicates governance reform, hindering sustainable recovery. Enhancing transparency and accountability is crucial for a resilient economic landscape.
Introduction to the Caribbean Financial Action Task Force (CFATF)
The Caribbean Financial Action Task Force (CFATF) is an intergovernmental organisation with 24 member states and territories in the Caribbean Basin, Central, and South America. It aims to enhance international efforts against financial crimes by implementing standardised measures against money laundering, terrorist financing, and weapons of mass destruction financing.
The CFATF monitors and evaluates member countries' anti-money laundering and counter-terrorism financing frameworks, ensuring global standards are met. This operational framework facilitates effective collaboration, sharing best practices, and strengthening legal and regulatory frameworks to mitigate financial crime risks.
Image source: CFATF logo
Suriname's Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) System
Suriname's Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) system is improving to align with international standards but faces challenges like resource limitations and effective enforcement. The financial sector is tasked with detecting and reporting suspicious activities, but gaps remain in monitoring and controlling financial flows. Improvement and international cooperation are crucial for Suriname to enhance the effectiveness of its AML/CFT system and combat illicit financial activities comprehensively.
Image source: Money laundering in Latin America and the Caribbean 2023 | Statista
The Basel AML Index is a composite index comprising 16 indicators assessing corruption, financial standards, political disclosure, and the rule of law. It aims to gauge the risk of money laundering and terrorist financing in various nations.
Haiti ranks the highest with a value of 8.25.
Suriname follows closely in second place with a value of 7.06.
Nicaragua is third, with a value of 6.42.
The chart suggests the listed countries have higher values, indicating greater concerns or risks in the measured area. St. Lucia ranks the lowest among the countries listed, with a value of 5.25.
Overview of Suriname's Overall Crime Record
Image source: Criminality in Suriname - The Organized Crime Index (ocindex.net)
Mutual Evaluation and Compliance
The Mutual Evaluation Process is a comprehensive assessment by the Financial Action Task Force (FATF) or regional bodies like the Caribbean Financial Action Task Force (CFATF) to assess a country's anti-money laundering and counterfeiting standards implementation. This process thoroughly reviews the legal framework, regulatory practices, and enforcement actions, followed by on-site visits to engage with authorities and stakeholders. The report identifies strengths, weaknesses, and recommendations for improvement, with countries required to address deficiencies and monitor progress.
Image source: The mutual evaluation process
Recent Progress and Re-ratings
Suriname has improved its AML/CFT framework, prompting the CFATF to re-rate the country on several recommendations since the 2022 assessment. These include improvements in politically exposed persons, correspondent banking, tip-off and confidentiality, and customer due diligence for designated non-financial businesses and professions.
Continued Efforts and Challenges
Suriname is enhancing its follow-up process to address deficiencies and strengthen its AML/CFT measures. It reports progress to CFATF and highlights ongoing efforts to improve its regulatory framework.
Main Findings From the Mutual Evaluation Report
The main findings are the diagnosis based on which solutions can be framed. Let us delve into them.
Main Findings
Suriname is addressing money laundering and terrorist financing risks, but the process is still in its early stages. The first National Risk Assessment, completed in October 2021, provides a baseline for vulnerability understanding.
National Prosperity Building, a Safer Future and AML
National prosperity is also about channelising funds appropriately for a secure future for all citizens. Due to economic turndowns and other possible external shocks (remember COVID-19, wars, etc.), countries must curb the wastage of funds. This is where putting an end to AML is significant.
Money laundering negatively impacts national prosperity and economic stability, distorting markets, undermining financial institutions, and eroding investor confidence. Robust anti-money laundering measures are crucial for attracting investments and promoting prosperity for society.
Effective AML initiatives contribute to safer futures by mitigating risks associated with organized crime and terrorism financing. When AML frameworks are strong, they decrease the likelihood of illicit funds entering the financial system, thus reducing crime rates and improving societal safety. The decrease in financial crime not only leads to improved public safety but also enhances citizens' trust in governmental institutions, further solidifying a sense of security and stability within the nation.
Global cooperation is crucial for national prosperity, safer futures, and anti-money laundering (AML) efforts, as transnational financial crimes require collaboration. Sharing intelligence and strategic resources strengthens AML efforts, promoting economic prosperity and security.
Collaborative approaches in AML, like the AFC Ecosystem, can boost national prosperity and create safer futures by pooling expertise and resources. This strengthens domestic economies, positions nations as trustworthy partners, and enhances their international reputation, fostering greater economic opportunities.
Image source: AFC Ecosystem: World’s First Ecosystem to Fight Financial Crime (tookitaki.com)
Effective governance and regulatory measures are crucial for bridging the gap between national prosperity and AML initiatives. Enforcing stringent AML laws deters money laundering, protects financial markets, and ensures equitable distribution of economic benefits. Secure and transparent financial systems build trust, fostering economic and social growth and a brighter future.
Image source: Money Laundering/Terrorist Financing Risk Assessment (worldbank.org)
Suriname's financial crime framework is advancing, but there are still significant gaps in risk management, technology adoption, and virtual asset handling, indicating the need for enhanced regulatory measures and awareness.
Key Findings of Suriname’s Money Laundering (ML) and Terrorist Financing (TF) Risks
Each country has its own methods and share of money laundering and terrorist financing risks. We will look into the issues in Suinrmae.
Overview of Suriname's Understanding of ML/TF Risks
Suriname's National Risk Assessment (NRA) has analysed the country's vulnerabilities to money laundering and terrorist financing, promoting critical dialogue on financial and regulatory risks.
Image source: Risk analysis - general
EDD: Enhanced Due Diligence
Image source: Suriname 4th Round MER (cfatf-gafic.org)
UTR: Unusual Transaction Report
Image source: Suriname 4th Round MER (cfatf-gafic.org)
Suriname's National Risk Assessment (NRA) has analysed the country's vulnerabilities to money laundering and terrorist financing, promoting critical dialogue on financial and regulatory risks.
Impact of Incomplete Risk Assessment
Suriname's insufficient assessment of critical areas suggests a lack of understanding of money laundering and terrorist financing threats, especially related to virtual assets and new financial technologies, which could exacerbate its AML/CFT efforts.
OvJ: Public Prosecutors Office; FOT: Financial Investigations Team
Image source: Suriname 4th Round MER (cfatf-gafic.org)
Image source: NRA-herstel-internationale-reputatie-suriname.jpg (640×400) (dagbladdewest.com)
FED: Fraud and Economics Offences
Image source: Suriname 4th Round MER (cfatf-gafic.org)
Absence of Sectoral or Thematic Assessments
The absence of sectoral or thematic risk assessments in Suriname hinders the effective implementation of risk-based measures by regulatory bodies and businesses, as these assessments provide detailed insights into vulnerable industries.
Cases
Real-life cases provide insight into their seriousness and complexity, enabling even ordinary citizens to understand their role in society and potential contributions to its progress. Let us look at some cases.
Image source: Suriname 4th Round MER (cfatf-gafic.org)
Key Deficiencies in the National Risk Assessment (NRA)
The report highlights that Suriname’s NRA has several key deficiencies. The limited scope of the assessment means that critical areas related to ML and TF risks remain unaddressed. This includes:
Legal Persons and Arrangements: The National Register of Authors (NRA) is criticised for inadequately assessing the risks linked to the misuse of legal entities for ML and TF.
Image source: Transactions
New Technologies: The rise of digital financial services has raised significant concerns about the underrepresentation of emerging technologies.
Virtual Assets and Service Providers: The lack of comprehensive evaluation exposes potential vulnerabilities, particularly as these assets become more widespread globally.
Image source: Risk assessment support—World Bank
Suriname is enhancing its effectiveness by strengthening its risk assessment framework and addressing identified deficiencies despite initial steps taken to assess AML/CFT risks.
Suriname is working to enhance its compliance rating in Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT). Still, it faces significant deficiencies, including criminalization of money laundering and terrorist financing and the need for robust mechanisms to report suspicious activities. Despite these efforts being recognised in follow-up reports, the country is continuously monitored for further improvements in its compliance framework.
Image source: Suriname 4th Round MER (cfatf-gafic.org)
Implications of Blacklisting
Blacklisting should be avoided by countries at all costs since the implications are dire. Some are:
Reduction in Foreign Direct Investment
Countries blacklisted by the Financial Action Task Force (FATF) experience a significant decrease in foreign direct investment (FDI), with studies showing a 2% reduction in FDI to GDP ratio and up to a 5% reduction for those on the blacklist. This is particularly detrimental for developing nations, where foreign investment is crucial for job creation and economic development.
Economic Isolation and Trade Restrictions
Blacklisting can hinder a country's international trade, as banks and financial institutions impose enhanced due diligence measures, complicating or halting cross-border transactions. This isolation can limit access to essential goods and services, especially in sectors reliant on imports like food and healthcare.
Increased Cost of Living
Blacklisted countries face increased access to international financial services, resulting in higher living costs. High-risk assessments from lenders lead to increased interest rates and credit scarcity, burdening businesses and consumers. The inability to secure loans can lead to increased prices, reduced disposable incomes, and poverty for many.
Job Losses and Economic Instability
Blacklisting can lead to job losses as companies may scale down operations due to reduced funding and increased operational costs. Countries experiencing blacklisting often see a significant decrease in cross-border liabilities, resulting in layoffs across sectors. This job loss can lead to broader economic instability, impacting the unemployed, their families, and local communities.
Decline in Social Services and Support
Blacklisting has led to a decline in foreign aid and development assistance, causing many countries to struggle to maintain social services. This strains public resources for health, education, and infrastructure, putting more burden on the common person, resulting in deteriorating living standards and increased vulnerability.
Psychological and Social Impacts
Blacklisting can cause psychological distress, social unrest, and erode confidence in government and social structures. This can lead to increased anxiety and uncertainty among the populace. Citizens may experience humiliation and frustration, further affecting their well-being as their country grapples with the consequences.
The blacklisting of a country in AML/CFT leads to a domino effect, affecting the livelihoods of ordinary citizens and exacerbating economic and social challenges that may take time to recover from.
Measures Taken
Suriname's National Risk Assessment (NRA) on Anti-Money Laundering and Countering Terrorism and Corruption, recommended by the Caribbean Financial Action Task Force, reveals significant challenges and insufficient awareness of money laundering, crucial for the country's recovery from economic downturn, the COVID-19 pandemic, and rescheduling of $4 billion in debt.
Image source: Suriname 4th Round MER (cfatf-gafic.org)
Suriname is scrutinised for its AML/CFT frameworks, causing international pressure to improve regulatory measures. France, a Financial Action Task Force member, is helping Suriname strengthen these frameworks through capacity development programs. This is crucial for enhancing compliance with international standards and mitigating risks related to money laundering and terrorist financing.
Image source: Suriname 4th Round MER (cfatf-gafic.org)
Suriname and Guyana have partnered to improve their AML/CFT laws despite political disputes in Guyana hindering legislation. Suriname receives technical assistance for a risk-based supervisory framework, while Guyana collaborates with CFATF for an action plan. Guyana has established a National Coordination Committee to coordinate efforts against money laundering and terrorism financing. These agreements are crucial for regional stability and economic health, as noncompliance can negatively impact trade and growth.
Image source: Suriname 4th Round MER (cfatf-gafic.org)
Suriname is enhancing its Anti-Money Laundering and Counterfinancing of Terrorism (AML/CFT) framework by conducting inspections of financial institutions (FIs) to identify and address compliance deficiencies. Although progress has been made, challenges remain in ensuring all FIs adhere to the required standards. Continuous monitoring and evaluations are conducted to assess the effectiveness of these inspections and the overall AML/CFT regime.
President Santokhi’s Initiatives
During the election campaign, President Santokhi promised to implement a comprehensive anti-corruption law, creating a task force to combat corruption in the government and public sectors and aiming to establish a strong legal framework for robust oversight and accountability.
Suriname's President, Chandrikapersad Santokhi, sought IMF assistance in July 2020 to tackle economic challenges like high debt, inflation, and currency devaluation. The proposed reform package included economic stabilisation, improved governance, and anti-money laundering and corruption initiatives. The IMF approved a $688 million Extended Fund Facility in December 2021.
The Anti-Corruption Commission in Suriname was established in 2021 under the Santokhi administration to promote transparency, combat corruption (ranked 87th out of 180 countries—Transparency International, 2023), and demonstrate institutional reforms. Its role is to track and register the assets of elected and appointed officials.
Image source: Corruptions Perception Index (CPI), 2023: Interactive Map
Since taking office in July 2020, the Santokhi government in Suriname has been working to strengthen the judicial system, improve governance, and align the country's legal and institutional frameworks with international standards. This initiative aims to enhance the capacity of prosecutors and judges to handle corruption cases.
In 2021, the Santokhi administration addressed public dissatisfaction with economic management, corruption, and governance issues through national dialogue and engagement with civic organisations and community representatives. The government aims to build trust, address grievances, tackle root causes, and improve transparency and governance in Suriname.
Considering Oil Prospects
Current Situation in Suriname
The CEO of state-owned Staatsolie Maatschappij Suriname N.V., Annand Jagesar, is expressing concern over the slow pace of oil exploration in Suriname. The country has not discovered oil reserves comparable to Guyana's, which has become a significant non-OPEC oil source since its 2015 discovery.
Economic Implications
Oil exploration is a critical avenue for economic growth for Suriname, which has recently faced financial crises. The success of oil exploration could dramatically shift Suriname's economic status, similar to the transformation experienced by Guyana. If exploration fails, it could increase global reliance on oil from other regions, specifically Russia and the Middle East.
Exploration Challenges
TotalEnergies SE and APA Corp.'s 2020 oil discoveries have not been sustained, causing production targets to be delayed until 2027. If not developed quickly, Suriname could face stranded assets due to global renewable energy shifts. The presence of significant natural gas reserves poses logistical challenges.
Investment and Development Concerns
Major oil companies like TotalEnergies and Shell are cautiously investing in uncertain prospects. Suriname's oil fields require a break-even price of $25 per barrel for commercial viability. Staatsolie has the option to buy a minority stake in attractive fields.
Future Endeavors and Opportunities
Jagesar aims to expedite exploration by attracting interest from 12 companies for further offshore drilling contracts. It is taking a proactive approach to encouraging shallow-water drilling, which is expected to be financially manageable.
Forthcoming Election
The 2025 general election in Suriname will feature a national proportional representation system, replacing the district-based voting system. This will ensure equal weighting of votes and improve the chances of smaller political parties securing National Assembly seats.
Bouterse, facing legal challenges, has been convicted of murdering political opponents, leading to a 20-year prison sentence, which prevents him from participating in upcoming elections. Bouterse's political viability and ability to campaign or hold office are significantly impacted by his failure to report to state authorities post-conviction.
Despite remaining influential within the National Democratic Party, the individual is unlikely to run in future elections due to his current legal issues and potential political career consequences.
In summary, Dési Bouterse will not be standing for the next election, given his legal issues and their implications for his political future.
Recommendations
Action needs to be taken to tackle AML/CFT. Prevention is key. We have some recommendations.
Legislative Reforms
Suriname must address legislative gaps in its Anti-Money Laundering and Counter-Terrorist Financing framework, updating laws related to Customer Due Diligence, politically exposed persons, and beneficial ownership transparency to align with international standards set by the FATF.
Strengthening Institutions
Training programs on AML/CFT compliance are crucial for financial institutions and regulatory bodies to enhance their capacity to detect and report suspicious activities, improving their knowledge and operational effectiveness.
Joining the Egmont Group
The Egmont Group is an international network of Financial Intelligence Units (FIUs) established in 1995 to combat money laundering and terrorism financing. It facilitates secure financial intelligence exchange, promotes best practices, and enhances FIUs' capabilities. With over 160 member FIUs worldwide, it supports national and international efforts against financial crimes.
Suriname, a member of the Egmont Group since 2019, benefits from a secure platform for exchanging financial intelligence, enhancing its ability to combat financial crime, money laundering, and terrorist financing through global collaboration.
Enhancing Political Will and Cooperation
Strengthening political will to implement AML/CFT measures requires collaboration between government, financial institutions, and international partners to coordinate a response against money laundering and terrorist financing.
Public Awareness Initiatives
Educational campaigns can help raise public awareness about the importance of AML/CFT regulations and the consequences of non-compliance, educating businesses and the public about their roles in combating money laundering and terrorist financing.
Effective Enforcement Mechanisms
Implementing robust enforcement mechanisms, including strict penalties and continuous monitoring to identify and mitigate money laundering and terrorist financing risks, is crucial for ensuring compliance with AML/CFT laws.
Monitoring and Evaluation
Regular audits and assessments by independent bodies can identify areas for improvement and enhance the effectiveness of AML/CFT measures.
Role of Subsidy
Social assistance programs often lack coverage for vulnerable populations in interior regions and certain ethnic groups, leading to significant gaps in financial transfers and complex delivery systems. This lack of comprehensive data necessitates implementing an integrated system for policy decision-making and improvement. This is crucial since development has to trickle down to the lower base of the wealth pyramid.
Suriname's government is enhancing Anti-Money Laundering (AML) measures alongside plans to eliminate subsidies. The aim is to improve fiscal sustainability and combat corruption, as the country's political and economic landscape is intricately linked. This is appreciable since it is always better to empower the population to stand on their own two feet. As they say, ‘Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime.’
Suriname is implementing AML measures and subsidy removal to address fiscal and governance challenges. Strengthened efforts are required even when the government aims to improve compliance with AML and enhance fiscal responsibility through subsidy cuts. These reforms must alleviate economic strain caused by corruption and weak governance structures, strengthen the financial system, and rebuild trust among international stakeholders and investors for a long-term economic recovery.
Potential Policy Models
South America, particularly the Tri-Border Area (TBA) involving Paraguay, Argentina, and Brazil, is working to counter terrorism financing through collaborations, raising awareness, building institutional capacity, and implementing targeted financial sanctions. However, the relationship between subsidy reduction measures and effective AML/CFT policies is poorly documented.
Some other models that could be followed (note that the context varies with each country) are:
The U.S. has a robust AML/CFT framework, including the Bank Secrecy Act and USA PATRIOT Act, which mandate that financial institutions conduct thorough due diligence and report suspicious activities. The EU's 5th AML Directive aims to improve transparency by requiring beneficial ownership information and fostering cooperation between Financial Intelligence Units (FIUs).
Singapore's robust Anti-Money Laundering and Countering Financing of Terrorism framework, requiring financial institutions to conduct due diligence, report suspicious transactions, and implement risk-based assessments, is overseen by enforcement agencies.
The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 governs Australia's framework, requiring financial institutions and businesses to identify, mitigate, and report suspicious transactions. The Australian Transaction Reports and Analysis Centre (AUSTRAC) oversees compliance.
Saudi Arabia's Anti-Money Laundering and Counter-Terrorism Financing Framework, based on the Anti-Money Laundering Law and the Law of Combating Terrorism Crimes, requires financial institutions to conduct due diligence, report suspicious activities, and implement preventive measures.
Suriname can strengthen its AML/CFT framework by prudently and contextually implementing these frameworks. This will contribute to a more effective response to financial crime and enhanced international compliance.
Conclusion
Suriname has made significant strides in enhancing its Anti-Money Laundering (AML) and Counter-Terrorist Financing framework, particularly since a mutual evaluation conducted by the Caribbean Financial Action Task Force in 2022. The evaluation identified various deficiencies but acknowledged progress in legislative reforms, including enacting new AML/CFT laws and improved supervisory mechanisms by the Central Bank of Suriname (CBvS).
Key findings reveal that Suriname has been re-rated positively on several (14 out of 40) FATF Recommendations, including Politically Exposed Persons (PEPs), Correspondent Banking, and Tipping-Off and Confidentiality, illustrating advancements in compliance. However, concerns remain regarding the AML/CFT regime's effectiveness, with implementation challenges, particularly in addressing public corruption and financial crimes linked to sectors like gold mining and casinos.
Blacklisting a country under Anti-Money Laundering and Combating the Financing of Terrorism frameworks can significantly impact citizens' livelihoods, leading to increased poverty, reduced access to financial services, and job losses. It makes sense to retain political and economic stability by adhering to FATF guidelines.
Anti-money laundering (AML) initiatives are crucial for national prosperity, economic growth, and stability. They safeguard financial systems, enhance safety, and form a cohesive model for sustainable development, ensuring a safer future. Suriname's "Free" ranking reflects an open democratic process, but corruption, judicial independence, and political intimidation persist, posing challenges to its governance and democratic integrity. The current government has an opportunity to turn things around—a chance we hope they will not miss acting upon.
In summary, while Suriname has made notable strides in enhancing its AML/CFT system and compliance with international standards, continued efforts are necessary to address existing deficiencies and maintain the momentum of improvement. With time, Suriname could be a beacon of light for other nations in South America and globally.
