“AFBA” concerning subordination of Financial Monitoring Service
\"The Association of Young Financiers and Businessmen” presented the evaluation concerning the changes of subordination in Financial Monitoring Service on March 25, at \"Pirvelis” press club. The organization states, that they are responding to the stir concerning the recent changes of subordination in Financial Monitoring Service. \"Certain non-governmental organizations, media sources and experts tend to consider, that the government is trying to get its hands on Financial Monitoring Service and use it for the political means. Unfortunately, no one points out the past activities and political involvement of this service, when \"Georgian Dream” made its first appearance. Deeply concerning are the statements, claiming that Financial Monitoring Service has always been an undefiled authority and it is threatened to be used as a political weapon only now.” – stated the president of \"AFBA”, Nodar Chichinadze.
As it is stated in the evaluation, the basis of such statements is the information of activities supplied by the Financial Monitoring Service itself.
\"As you already might now, from the moment of \"Georgian Dream’s” first appearance, the leaders and members of the party were exposed to harassment, surveillance, blackmail, pressure and other similar cases from the former governing political party, which was aiming for discretization and formulation of a social perception, that would completely exclude \"Georgian Dream” from winning the elections. It is also known, that wide range of governmental organizations were also involved in this campaign – Law Enforcing agencies, ministries and departments, local governments, including regulators of financial field, organizations with politically neutral positions, such as, national bank and associated financial monitoring service.
We would like to remind you a specific fact, of what role did Financial Monitoring Service play in repressions of political opponents. On 27th of July, 2012, Prosecution announced the seizure of Kakha Kaladzi’s accounts, and it was clearly stated in the document, that the information about money laundering came from Financial Monitoring Service.
Approximately one month prior to this fact, on June 14th, American shareholder of \"Global TV”, Aleksander Ronges was arrested at the Tbilisi International Airport on the account of information supplied from Financial Monitoring Service. It is to be noted, that this is the company, which was restricted from distribution of satellites to their customers, so that citizens would have been exposed only to government issued media. Two major media companies had their share in this process, when they sued \"Global TV” and imposed the company to dismantle already distributed antennas. Today, one of these organizations portray the information in a way, as if now is the only case, when Financial Monitoring Service is facing the threat of subordination and might become a political weapon”, - stated in the evaluation of organization.
According to the statement of \"AFBA’s” vice-president, Shota Gulbani, suspicion arises from the given facts, that as in the case of Kaladze, Financial Monitoring Service was \"investigating” bank accounts of various opposition leaders and was supplying Prosecution with \"required” information, so that the latter could implement \"further actions”.
\"We hold information from a reliable source, which, unfortunately, we cannot name, that there was a non-official agreement between former leaders of Prosecution, national bank and Financial Monitoring Service, to collect the appropriate information about politically active persons and it will be reasonable to assume, that initiator and coordinator of such \"cases” was Prosecution itself”, - states Gulbani.
The young financiers consider, that there is a deliberate lobbying and replication of the idea, that in case of subordination to Ministry of Finance, the monitoring service will lose independency and that with today’s circumstances, it is more independent under national bank, on basis of the fact that national bank itself is independent and apolitical body. Although, the organization considers, that national bank was the body, which was desperately defending and actively lobbying the changes in October, 2011, concerning transferring the right of mortgagee to the state.
\"These changes were directed against \"Cartu Bank” and government, forming deals with various companies, deprived the bank from property of collateral loans, which became the reason for national bank to temporarily take control over \"Cartu Bank”. Today, it is strongly believed, that national bank, together with former and active leaders, which were openly involved into political activities, is an apolitical body and subordination of Financial Monitoring Service, which was ordered by Prosecution, is the determinant of its effective functioning”, - explained Shota Gulbani.
\"AFBA” considers that Financial Monitoring Service was a political weapon throughout previous years and their activities were completely depended on the political situations at the specific time. When the opposing parties would be spotted on increasing activities, for example during the well-known events in 2007, as well as 2011-2012, control of specific persons from the monitoring service was significantly increasing. This arises suspicion, as if there was an order from \"outside” on whom to gather information about.
Nodar Chichinadze makes a following statement concerning the change of subordination for monitoring service:
\"In the current state of the state’s development, there is nothing of the concern if Financial Monitoring Service will be subordinated under Ministry of Finance, although, it might be changed and instead, be handed over to the Prime Minister. In 2003, when the monitoring service was formed, its existence under national bank was determined by those objective conditions, that during existing reality national bank was the institutionally strong body and the government was not effective. In addition, as the main sources of information for Financial Monitoring Service are banks, national bank would have been more reliable and easily adaptable structure. Nowadays, the adaptation period is long over and specific structural units operate in all commercial banks, which in some cases, function according to more strict regulations (compared to international standards), than it is set by the law. We are not facing this problem today, the government is working properly and in these circumstances, we believe, that subordination of monitoring service under the government will not limit its independency. We consider that campaign, opposing this idea, is originated from the national bank itself, because today, the real leader of this service is Giorgi Qadagidze, and his close friend, Mikheil Roinishvili, is just a formal chief”.
The young financiers believe, that subordination of Financial Monitoring Service to the government does not, in any sense, limits and silences the functions of this service and does not original the legal threat, that it will be used for political purposes. As of the activities deviated from the law, the past holds facts of Financial Monitoring Service functioning under the orders from Prosecution. As of the argument, that international financing institutions positively evaluate Financial Monitoring Service, cannot be considers legitimate, for the subject of their evaluation has always been the methodology and technical sides, which were used by the monitoring service rather than for what reasons was it using them.
\"There is no threat in the change of subordination of financial monitoring service, the legislative initiation does not bring any harm neither to the independency of the service, nor to the banking secrecy. If the service will be handed over to the government, it will only increase co-ordination, which will comparably improve the effectiveness of financial monitoring service. Judging from existing state, if there are no specific directions set, if the risk-groups are not defined, monitoring service will hardly be effective, will be unable to identify specific crime among hundreds and thousands of cases, and the singular number of cases opened by the monitoring service, from its formation until today, supports the above stated”, - explained Shota Gulbani.
\"AFBA” supports the real independency of financial monitoring service and considers it essential, to leave the vicious practice in the past, according to which, this service, was functioning under Prosecution and was used for political purposes.
The organization studied the international practices in this direction, according to which, financial monitoring service (different names in different countries), aside of Georgia, is functioning under the national (central) bank only in 3 countries, in all other cases, it is either under Ministry of Finance or any other governmental body, sometimes even being an independent structure.
\"AFBA” presented the list of what situation is in the various countries:
Countries where financial monitoring service functions under national (central) bank:
Azerbaijan – in the central bank
Armenia – in the central bank
Italy – separate structure in the central bank
Countries where financial monitoring service is subordinated to Ministry of Finance:
Albania – independent body in the Ministry of Finance
Belgium – independent administrative body, which is supervised by Ministers of Finance and Justice.
Croatia – in the Ministry of Finance
Czech Republic – in the Ministry of Finance
France – independent agency at the Ministry of Economics and Finance
Kazakhstan – separate committee of Ministry of Finance
Macedonia – in the Ministry of Finance
Malta – autonomic structure at the Ministry of Finance, Economics and Investments
Poland – in the Ministry of Finance
Serbia – in the Ministry of Finance and Economics
Slovenia – in the Ministry of Finance
Turkey – autonomous unit in the Ministry of Finance
India – autonomous unit in the Ministry of Finance
South Korea – autonomous unit in the Ministry of Finance and Economics
Brazil – in the Ministry of Finance
Canada – independent agency, accountable to Ministry of Finance
Mexico - part of Ministry of Finance
USA – Treasury Bureau of the United States
Countries, where financial monitoring service is in the hands of other governmental bodies (except Ministry of Finance):
Austria – Ministry of Internal Affairs
Belorussia – Committee of State Control. Part of executive branch.
Bosnia and Herzegovina – Separate investigative unit at the police.
Estonia – intelligence service at the police and department of border control.
Finland – national bureau of investigation at the police
Germany – the office of federal criminal police
Hungary – at the structure of tax and customs administration
Iceland – part of the police
Ireland – part of the police
Israel – at the Ministry of Justice
Latvia – criminal police
Litva – Ministry of Internal Affairs
Luxemburg – Ministry of Justice
Montenegro – governmental structure
Netherlands – autonomous unit at the international agency department of police.
Great Britain – an independent legal entity under the department analogous to MIA
Portugal – part of the police
Romania – part of the Ministry of Internal Affairs
Russia – separate service at the executive power
Slovakia – part of Ministry of Internal Affairs
Moldova – the center against economic crime and corruption (with executive power)
Sweden – part of the police
Switzerland – part of the federal police
Ukraine – separate unit at the executive power
Uzbekistan – authority under General Prosecution’s Office
Japan – at the national agency of police
New Zealand – part of the police
Argentina – independent unit at the Ministry of Justice
Countries, where financial monitoring service is and independent structure:
Bulgaria – independent structure \"National Security Agency, which has additional functions aside the prevention of money laundering.
Cyprus – independent body, where representatives of various authorities are part of supervisory board
Greece – independent body, which consists of representatives of various authorities (central bank, commission of securities, ministries of finance, justice and development)
Norway – investigation center for economic crimes
Spain – money laundering and financial crime eradication commission
Tajikistan – financial monitoring department
Australia – independent governmental agency