JANELLE DE SOUZA and RIA CHAITRAM
Even as the new polymer $100 banknotes arrived at the Central Bank under tight security, Finance Minister Colm Imbert disclosed that over 80 million existing bills would have to be phased out of the system.
He made the announcement on Saturday as he debated the Miscellaneous Provisions (Proceeds of Crime and Central Bank) Bill 2019 which was passed unanimously without amendments in a special sitting of the Senate.
Imbert said the 80 million $100 bills in circulation had a value of $8 billion, but that some would be damaged so the number was not exact.
When asked by Opposition Senator Wade Mark if the equivalent number of bills were ordered by the Central Bank, Imbert would only say that an “adequate supply” was procured. He also did not say exactly when the date of cancellation for the paper and cotton notes currently in use would be.
Listing the changes to the acts, Imbert noted that in Section 55, 3(c) of the Proceeds of Crime Act a $90,000 transaction of any kind would be deemed a “large transaction” and therefore be subject to bank scrutiny. The amendment would make it that the minister of national security had the power to change that figure. Again, he did not say how that figure would be adjusted.
He explained that Section 27 of Central Bank Act said the bank had to give three months notice before the “appointed day” that any banknote was expected to be cancelled. The amendment of Section 27A(i) would see that time reduced to a minimum of two weeks.
Government added a precautionary clause, Section 27A(iv), that commercial banks could redeem banknotes at face value for a period of three months after the appointed day if there was “good and sufficient reason.”
The Section 27A(vi) amendment said the bank, in consideration with the minister of finance, would lay out the conditions of “good and sufficient reason” as well as the necessary procedures.
Section 27A(v) of the amendment also gave the finance minister the power to extend the appointed day or the three-month period to redeem the old banknote after cancellation.
Imbert said the adjustments would increase TT’s credibility in the eyes of international financial organisations.
“This is actually a big win for TT with FATF (Financial Action Task Force) and Global Forum because it strikes at the heart of the underground economy – at tax evaders, at drug traffickers, at money lenders – who are the primary concerns of the Financial Action Task Force, the EU, and the Global Forum. So this is a big win, if it works, and we expect it to because we planned it very well.”
He said from the example of other countries there were a number of positive effects of currency demonetisation, or retiring a form of money as legal tender. He said it would increase the level of savings at financial institutions, increase consumption, and increased economic activity.
In his contribution, National Security Minister Stuart Young assured the public that there is no need to panic with the phasing out of the old $100 bill for the new polymer $100 bill.
Young had announced on Thursday that the new bill will take effect from Monday and said mechanisms have been put in place to ensure a smooth exchange of the notes at the Central Bank, commercial banks, credit unions and other financial institutions.
He said, “We have studied this thing for months. It has been kept very secret and very confidential and we have learnt from the errors of other jurisdictions.
“The money that has been brought in for the replacement of the existing notes is safe. There are sufficient new notes for replacing the old notes.”
On Friday, Young, Imbert, the heads of security at the various banks and other members of the banking sector met to discuss security concerns that may arise out of this transition.
Young said people should also exchange their notes at the stipulated times as there will be no extensions to do so.
Addressing concerns raised by the Muslim community, who do not use banking systems, as it is contrary to their religion, Young said, “There is no compulsion from anyone to open a bank account.
“You (can) walk into the bank, present your old notes and get your new notes. So, there is absolutely no mandatory obligation on anyone to open a bank account.”
He added that provisions are being made with the Central Bank, in this regard, in the event that commercial banks to do not co-operate.
The need for this change, Young re-iterated, is the Government’s fight toward curbing illegal activities such as money laundering, fraud, tax evasion, terrorist financing, among others.
Noting Friday's double murder on Chancellor hill, he said many other murders are linked to criminal activities. He said the cash that was found on the scene could only lead to speculation that a deal had gone wrong.
The minister added there is no hiding that criminal elements operate with only the use of cash and do not engage the use of banks.
“Once you engage the banking system there is a massive fingerprint that can be followed. The change and de-monetisation will therefore force the stored cash into the (banking) system,” he said.