TO FIU OR NOT TO FIU .... that is the question!!



Readers of this blog will know that I have in the past been quite critical of Winston Dookeran's performance as Finance Minister. The truth is that I remain critical of his performance and do believe that he could have done better and, perhaps more importantly, ought to be doing better. I am of the view that a lot of unnecessary pain is being inflicted on the economy of Trinidad & Tobago because of his failures to act on many fronts.

However, in the interest of fairness I came across some information over the weekend that a few people are very ... nay, acutely aware of, but of which most people haven't got a clue. It all begins with the Financial Intelligence Unit (the FIU) which came into being a little while ago amidst certain (inevitable?) contraversy as to the appointment of Ms. Susan Francois (... a lady for whom, incidentally, I have always had the highest personal regard). And this information tends to put a slightly different light on the general contractions in the economy that are taking place.

It seems that the International Monetary Fund (the IMF) and the Americans have been putting the proverbial squeeze on good old T&T especially as regards money laundering. The IMF has literally forced the Government to put measures in place that have put a most severe squeeze on the activities of our dearly beloved and protected Drug Lords. It is now (thanks in large part to the activities of the FIU) much more difficult to launder money. In the past, for example, a Drug Lord could have a shop in, let's say, a popular mall. He could use that shop as a front to launder, say TT$100,000 per day saying that this was his receipts. The bank would happily accept it even though if you made a trip to the mall you would ss hardly anybody in the shop and his alleged sales did not match his actual purchases. But nobody was complaining. Everybody was making money!

Indeed, the 'black' or underground economy was as big as the 'white' or legitimate economy. That, for your information, is about TT$50 billion a year ... or if you prefer it in greenbacks, a little under US$8 billion a year! A sizable sum in any currency!!

But now, the banks are being forced to question the deposits and to report them. The FIU is sending its agents to monitor stores (like the hypothetical one used as an example above) to see whether or not the stores are really doing the business that they say that they are. In addition, the FIU is reporting the results to the Board of Inland Revenue who are checking to see whether or not income tax is being paid. And the agents are sitting in front of the stores for weeks and can judge fairly easily that, for example,our hypothetical store is not doing $100,000 a day in sales.

The result has been severe pain for the Drug Lords who have legitimate debts that they can no longer service. If what I heard is true, for example, a certain Drug Lord owes some TT$900 million to a certain bank. He was more than able to service this loan in the past, but all of a sudden he can't. Money/cash is piling up in shoe boxes but he can't get it into the system. The result is that his legitimate businesses are going slowly bust! And he ain't alone!!

Put another way, just at the time that the legitimate economy is contracting, the underground economy is crashing! Trinidad & Tobago is getting a "double whammy" of bad news. Apparently, you can't even buy a million dollar car (Range Rovers, Porsche Cayennes, Mercedes Benz, etc.) without having to show the FIU where you got the money from to buy this (whatever "this"is) car. You can't buy a property without having to report the source of funds! Put another way, the easy days of money laundering appear to be over ... at least for the time being.

One of my cousins told me that he had met a senior FBI official recently who told him that T&T was the place to be a gangster. According to the FBI guy there is no other place in the world where it is so easy to steal and launder money. Hopefully, that will change now. But it is going to be painful. Taking even a portion of $50 billion out of the system will cause pain and suffering ... necessary as it so obviously is.

But, you know, Mr. Dookeran should have told us this. We shouldn't have to find out for ourselves. This is what openness and transparency is all about. And anything that hurts the Drug Lords has to be a good thing.