Jamaica is on the FATF List of Countries that have been identified as having strategic AML deficiencies
FATF Statement re AML Strategic Deficiencies: 21 February 2020
In February 2020, Jamaica made a high-level political commitment to work with the FATF and CFATF to strengthen the effectiveness of its AML/CFT regime. Since the completion of its MER in November 2016, Jamaica has made progress on a number of its MER recommended actions to improve technical compliance and effectiveness, including by amending its customer due diligence obligations. Jamaica will work to implement its action plan, including by: (1) developing a more comprehensive understanding of its ML/TF risk; (2) including all FIs and DNFBPs in the AML/CFT regime and ensuring adequate risk based supervision in all sectors; (3) taking appropriate measures to prevent legal persons and arrangements from being misused for criminal purposes, and ensure that accurate and up to date basic and beneficial ownership information is available on a timely basis; (4) taking proper measures to increase the use of financial information and to increase ML investigations and prosecutions, in line with the country’s risk profile; (5) ensuring the implementation of targeted financial sanctions for terrorist financing without delay; and (6) implementing a risk based approach for supervision of its NPO sector to prevent abuse for TF purposes.
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Jamaica was undertaken by the Financial Action Task Force (FATF) in 2016. According to that Evaluation, Jamaica was deemed Compliant for 6 and Largely Compliant for 10 of the FATF 40 Recommendations.
US Department of State Money Laundering assessment (INCSR)
Jamaica is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.
Money laundering in Jamaica is largely perpetrated by organized criminal groups, including some with links to powerful Jamaicans. In 2019, the country recorded a large number of financial crimes related to advance fee fraud (lottery scams), corruption, counterfeit goods, small arms trafficking, and cybercrime.
The Government of Jamaica has enforced the asset forfeiture provisions of the Proceeds of Crime Act (POCA) with moderate success, but the law still is not being implemented to its fullest potential due to difficulties prosecuting and achieving convictions in financial crime cases. Law enforcement, prosecutors, and the judiciary lack sufficient resources and training to investigate and prosecute financial crimes efficiently and effectively.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 43
World Governance Indicator – Control of Corruption 50
The Jamaican economy is heavily dependent on services, which accounts for more than 70% of GDP. The country continues to derive most of its foreign exchange from tourism, remittances, and bauxite/alumina. Remittances and tourism each account for 30% of GDP, while bauxite/alumina exports make up roughly 5% of GDP. The bauxite/alumina sector was most affected by the global downturn while the tourism industry and remittance flow remained resilient.
Jamaica's economy faces many challenges to growth: high crime and corruption, large-scale unemployment and underemployment, and a debt-to-GDP ratio of about 130%. The attendant debt servicing cost consumes a large portion of the government's budget, limiting its ability to fund the critical infrastructure and social programs required to drive growth. Jamaica's economic growth rate in the recent past has been stagnant, averaging less than 1% per year for over 20 years.
Jamaica's onerous public debt burden is largely the result of government bailouts to ailing sectors of the economy, most notably the financial sector. In early 2010, the Jamaican Government initiated the Jamaica Debt Exchange to retire high-priced domestic bonds and reduce annual debt servicing. Despite these efforts, debt continued to be a serious concern, forcing the government to negotiate and sign a new IMF agreement in May 2013 to gain access to approximately $1 billion in additional funds. As a precursor, the government instigated a second National Debt Exchange in 2012. The IMF deal requires the government to reform its tax system, eliminate discretionary tax exemptions and waivers, and achieve an annual surplus of 7.5%, excluding debt payments, to reduce its debt below 100% of GDP by 2020. The SIMPSON-MILLER administration now faces the difficult prospect of having to achieve fiscal discipline to maintain debt payments while simultaneously attacking a serious crime problem that is hampering economic growth. High unemployment exacerbates the crime problem, including gang violence, which is fuelled by the drug trade.
Agriculture - products:
sugarcane, bananas, coffee, citrus, yams, ackees, vegetables; poultry, goats, milk; shellfish
tourism, bauxite/alumina, agricultural-processing, light manufactures, rum, cement, metal, paper, chemical products, telecommunications
Exports - commodities:
alumina, bauxite, sugar, rum, coffee, yams, beverages, chemicals, apparel, mineral fuels
Exports - partners:
US 24.4%, Canada 16.5%, Russia 9.3%, Netherlands 8.9%, Iceland 7.2%, UK 6.5% (2015)
Imports - commodities:
food and other consumer goods, industrial supplies, fuel, parts and accessories of capital goods, machinery and transport equipment, construction materials
Imports - partners:
US 32.6%, Venezuela 12.4%, China 12%, Trinidad and Tobago 11.1% (2015)
Investment Climate - US State Department
The Government of Jamaica (GoJ) considers foreign direct investment (FDI) a key driver for economic growth and is undertaking significant structural reforms to improve its investment climate. After suffering from a stagnant economy for more than two decades and accumulating one of the highest debt-to-GDP ratios in the world, the GoJ approved a four-year International Monetary Fund (IMF) program in May 2013. As one of its first requirements, the GoJ replaced its discretionary investment incentives with legislation that simplifies the income tax regime and codifies tax benefits for all investors. Despite this and other measures to improve its business climate, Jamaica’s bureaucracy remains a stumbling block in the facilitation of investment with delays and challenges particularly noteworthy in registering property, paying taxes, and enforcing contracts.
Jamaica received almost USD700 million in FDI in 2014, up from USD650 million in 2013. Tourism and infrastructure remain key sectors for investment, accounting for two-thirds of the 2014 outlay. Spanish and Chinese investors continue to dominate investment in these sectors. Business process outsourcing (BPO), including call centers and other remote technical support, has become an emerging sector for local and overseas investment - most prominently from the U.S. - and the government recently approved a five-year plan to encourage expansion. One drawback is Jamaica’s high electricity price – about 4-5 times higher than in the United States primarily due to inefficient petroleum-based power plants and outdated electricity infrastructure. While this could be an impediment for investment in some fields, Jamaica’s energy sector modernization itself has become increasingly attractive to U.S. investors.
The primary investment risk in Jamaica is crime because security is required to protect the physical infrastructure of most properties and the country’s murder rate remains one of the highest in the hemisphere. Additional risks include the challenges in navigating the government bureaucracy, the stagnant and price-sensitive economy, low labor productivity, and the possibility for labor disputes, some of which have led to sporadic protests in the past. The GoJ recently enacted legislation to permit flexible work arrangements as a means of improving productivity. While public perception of corruption is high and remains a consideration for investors, few U.S. firms have identified corruption as a significant deterrent to starting a business operation in Jamaica. Successive administrations have attempted to address corruption by enacting legislation and signing various international conventions. To date, there have been no high-level convictions. Jamaica improved its ranking from 85 to 69 out of 168 countries surveyed globally in 2015 in Transparency International's Corruption Perception Index.
A peaceful transition of government followed the Jamaica Labour Party’s (JLP) narrow victory over the People’s National Party in national elections on February 25, 2016. Wholesale changes in policies are unlikely and the new administration has pledged to focus on economic growth and job creation while maintaining fiscal prudence and continuing to meet the conditions of its IMF agreement.
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