HAITI
Summary
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Sanctions

EU

FAFT AML Deficient

No but CFATF have identified significant deficiencies in Haiti's AML/CFT regime

Higher Risk Areas

 

Compliance with FATF 40 + 9 Recommendations

US Dept of State Money Laundering assessment

Not on EU White list equivalent jurisdictions

Corruption Index (Transparency International & W.G.I.)

World Governance Indicators (Average Score)

International Narcotics Control Majors List

Failed States Index (Political Issues)(Average Score)

 

 

ANTI-MONEY LAUNDERING

 

FATF Status

Caribbean FATF Public Statement on Haiti released following CFATF meeting on 9th November 2016

The CFATF undertook a High Level Mission (HLM) to the Republic of Haiti on Monday 27th of April 2015. Thereinafter, a letter from the CFATF Chair, was sent to Haiti on the 17th of September 2015, making reference that Haiti would remain in the second stage of enhanced of follow-up but would need to demonstrate progress. At the CFATF Plenary in November 2015, Haiti demonstrated some progress on non-legislative measures. Plenary determined that Haiti should remain in the status quo and demonstrate to the May 2016 Plenary substantial compliance with both non-legislative and legislative requirements. At the CFATF Plenary in June 2016, Haiti demonstrated that had taken steps towards improving its AML/CFT compliance regime with non-legislative actions, including providing training to FIU, Police officers, Prosecutors and Magistrates; and taking steps to join the Egmont Group. However, Plenary was not satisfied with the pace of reforms and agreed to the issuance of a public statement against Haiti asking members to consider the risk posed by Haiti. Plenary also agreed that Haiti must make sufficient progress and demonstrate such progress by the November 2016 Plenary. At the CFATF Plenary in November 2016, Haiti demonstrated that sufficient progress has been made through: the amended Law Sanctioning Money Laundering and Terrorist Financing (LSMLTF) by the Chamber of Deputies on September 9th, 2016 and by the Senate on September 28th, 2016; the enactment of the new UCREF law seeking to establish the l’Unité Centrale de Renseignements Financiers (Central Financial Intelligence Unit) (UCREF) as an autonomous administrative financial intelligence unit; and the publication in the National Gazette of the Decree establishing procedures for the implementation of measures aimed at freezing funds and other assets connected with the financing of terrorism.

Haiti is encouraged to continue the reform process including the passage of the legislative framework and continue addressing its AML/CFT deficiencies.

Haiti and the CFATF should continue to work together to ensure that Haiti’s reform process is completed, by addressing its remaining deficiencies and continue implementing its Action Plan.

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Haiti was undertaken by the Financial Action Task Force (FATF) in 2008. According to that Evaluation, Haiti was deemed Compliant for 1 and Largely Compliant for 6 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 5 of the 6 Core Recommendations.

 

US Department of State Money Laundering assessment (INCSR)

Haiti is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.

OVERVIEW

 

Haitian criminal gangs are engaged in international drug trafficking and other criminal and fraudulent activity. While Haiti itself is not a major financial center, regional narcotics and money laundering enterprises utilize Haitian couriers, primarily via maritime routes. Much of the drug trafficking in Haiti, as well as the related money laundering, is connected to the United States. Important legislation was adopted over the past several years, in particular anti- corruption and AML laws, but the weakness of the Haitian judicial system leaves the country vulnerable to corruption and money laundering.

 

On June 8, 2016, the CFATF issued a public statement asking its members to consider the risks arising from the deficiencies in Haiti’s AML/CFT regime. The statement follows CFATF’s acknowledgement that, although Haiti had made improvements in non-legislative areas, it had not made sufficient progress in fulfilling its action plan to address its serious AML deficiencies including legislative reforms. On November 9, 2016, the CFATF reaffirmed its stance, although noting Haiti’s recent progress and efforts to introduce new legislation, including a new law designed to grant administrative autonomy to the Central Financial Intelligence Information Unit (UCREF), Haiti’s FIU.

 

VULNERABILITIES AND EXPECTED TYPOLOGIES

Most of the identified money laundering schemes involve significant amounts of U.S. currency held in financial institutions outside of Haiti or non-financial entities in Haiti, such as restaurants and other small businesses. Foreign currencies represent 63 percent of Haiti’s bank deposits as of October 2016. A great majority of property confiscations to date have involved significant drug traffickers convicted in the United States. Illicit proceeds are also generated from corruption, embezzlement of government funds, smuggling, counterfeiting, kidnappings for ransom, illegal emigration and associated activities, and tax fraud.

 

Haiti has seven operational FTZs. There are also 157 licensed casinos and many other unlicensed casinos. Online gaming is illegal.

 

KEY AML LAWS AND REGULATIONS

 

The AML legislation passed in 2013 was further strengthened by amendments in 2016. In 2014, the Executive signed a long-delayed anti-corruption bill. Banks and financial companies, wire transfer agencies, credit unions, insurance companies, cooperatives, casinos, lawyers, accountants, notaries, and real estate agents must comply with KYC rules and report suspicious transactions to the UCREF.

 

Haiti is a member of the CFATF, a FATF-style regional body.

 

AML DEFICIENCIES

 

The weakness of the Haitian judicial system and prosecutorial mechanisms as well as judges’ and prosecutors’ lack of knowledge of the recently adopted legislative amendments continue to leave the country vulnerable to corruption and money laundering. Haiti is not a member of the Egmont Group, but is currently applying for membership.

 

The government remains hampered by ineffective and outdated criminal codes and criminal procedural codes, and by the inability or unwillingness of judges and courts to address cases referred for prosecution. Draft criminal codes and criminal procedural codes that would address these deficiencies are expected to be considered by parliament over the next few months.

 

The government should continue to devote resources to building an effective AML regime, to include continued support to units charged with investigating financial crimes and the development of an information technology system. The 2013 AML/CFT law and its 2016 amendments, despite strengthening the regulatory framework to combat financial crimes, undermine the independence and effectiveness of Haiti’s FIU.

 

Haiti also should take steps to establish a program to identify and report the cross-border movement of currency and financial instruments. Casinos and other forms of gaming should be better regulated and monitored. The Government of Haiti should take steps to combat pervasive corruption at all levels of Haitian government and commerce.

 

ENFORCEMENT/IMPLEMENTATION ISSUES AND COMMENTS

 

The Government of Haiti continues to take steps, such as training staff and coordinating with the nation’s banks, to implement a better AML regime. In September 2016, the National Assembly added missing elements to the 2013 AML/CFT law to bring it up to international standards, although deficiencies still remain. In order for Haiti to fully comply, however, the criminal code will have to be updated.

 

After years of delay, passage of the 2014 anti-corruption law constituted a positive step to try to address public corruption, but implementation issues remain. Frequent changes in leadership, fear of reprisal at the working level, rumored intervention from the Executive, and a lack of judicial follow-through (prosecutions) make implementation particularly difficult. Frequent changes in the judiciary also make it difficult for cases to be followed by prosecutors.

 

The UCREF has continued to build its internal capabilities and to do effective casework. The UCREF forwarded six cases to the judiciary in 2016. Continued issues in the judicial sector mean the UCREF’s progress is not yet reflected in conviction rates. Once a case is received, an investigating judge has two months from the arrest date to compile evidence, but there is no limit to the timeframe to schedule court dates, communicate with investigating agencies and prosecutors, and track financial data. There were no convictions or prosecutions for money laundering in 2016.

 

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SANCTIONS

UN and EU relating to the non-implementation by the military authorities to hand over power and instances of violations of human rights. The restrictions were initially put in place in 1994 but have been regularly reviewed and reduced since.

 

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BRIBERY & CORRUPTION

 

Index

Rating (100-Good / 0-Bad)

Transparency International Corruption Index

20

World Governance Indicator – Control of Corruption

9

 

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INVESTMENT CLIMATE - Executive Summary (US State Department)

Since 2011, the government of President Michel Martelly has taken steps to encourage foreign investment and to develop private-led, market-based, economic growth. The country, widely supported by international assistance, focuses on reinforcing public administration, developing infrastructure, and promoting investment. Private investment continues to grow, and set a 10-year high in 2013, outpacing foreign assistance spending in Haiti by more than 100 percent. The Haitian government has designated key investment sectors, including tourism, agriculture, construction, energy, and manufacturing, and it supports them through administrative incentives and public spending. The government is currently implementing a vast reform to improve the legal framework for doing business, drafting new laws, and amending outdated ones to encourage investment. In addition, investment promotion authorities have attempted to expedite business start-up by developing “off-the-shelf,” pre-registered corporations for investors seeking to do business in Haiti. The Government of Haiti hopes to increase private and foreign investments by 16 percent over the next two years.

Haiti’s economy grew by a 4.3 percent in 2013, while inflation remained in single digits, despite a depreciation of the local currency against the U.S. dollar. GDP growth is expected to remain at a similar level in 2014, supported by public investments, remittance inflows, and continued growth in the manufacturing, construction, and tourism industries. Despite being favorable, the general investment outlook for Haiti in 2014 will be contingent on the continuation of legal and structural reform efforts which have been delayed by long overdue elections and multiple ministerial changes.

 

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FURTHER REPORTS

2 May 2014  -  IMF Report  -  Haiti: Seventh Review Under the Extended Credit Facility

Extract:  -  "The banking sector remains sound. Credit to the private sector, which has nearly doubled since early 2010, slowed in recent months, following the tightening of monetary policy in February 2013. Broad money grew by about 7 percent (y/y) through end-September 2013. Financial soundness indicators of the banking system do not reveal potential weaknesses. The banking supervision department has strengthened the monitoring of the financial system (banks, transfer agencies and foreign exchange bureaux) by intensifying inspections, including with respect to the fight against money laundering. In this context, the BRH benefited from technical assistance from the U.S. Treasury’s Office of Technical Assistance (OTA). Joint inspections are carried out by OTA experts and inspectors from the supervision department at the BRH. Moreover, training was provided to inspectors, as well as to employees of banks, transfer agencies and foreign exchange bureaux, especially to enforcing officers."

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14 April 2014  -  Transparency International:  Haiti: a new anti-corruption law brings hope

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