Senator Richards: Financial transparency bill could shut NGOs

INDEPENDENT Senator Dr Paul Richards lamented on Friday that a new law to identify the beneficial owners of businesses had also roped in non governmental organisations (NGOs) whose voluntary work was likely to be impacted by new requirements to report their affairs.

He spoke in the Senate on the debate on an umbrella bill set to affect several existing financial laws, including the Non Profit Organisation Act 2019.

Richards said the bill and its requirements on NGOs came after the Government had passed a law to regulate the functioning of Non Profit Organisations (NPOs).

"We updated NGO laws a couple years ago which instituted significant new requirements for NGO ownership." He said the NGO sector in TT has done and continues to do amazing work.

"Many of those NGOs have reported the difficulty in their resources and capacity to keep up with the new onerous requirements...And we are adding more now!"

"If we continue with this for two more cycles more now, we are going to run three-quarters of the NGOs out of business in this country!"

He said that would be "a sad day in this country."

Richards quoted the Non Profit Organisation Act 2019 – although it is not listed on Office of the Attorney General's List of Revised Laws of TT – to say a "beneficial owner" was defined as one who "owns or controls more than ten per cent of the membership interest in a NPO."

He asked, "What is ten per cent of an NGO? It's an NGO.

"I racked my brain to figure out what that means in the context of an NGO."

Finance Minister Colm Imbert, who had piloted the bill, interjected, "Voting rights." He said all NGOs have a structure, whereby voting rights are exercised.

Richards remarked, "You could imagine if I'm confused, how many of the NGOs are more confused?

"It just becomes more and more difficult to exist in this space, because of the strings being pulled by the European Union (EU).

"I'm really concerned that the more these requirements become more and more onerous, the more people will just say 'This doesn't make no sense any more', and good work will fall by the wayside, because they just don't have the resources to continue to be compliant.

"Or they don't have the legal expertise or other resources that may not be available to the particular NGO and I really think that would be a shame, if we continue to dance to this foreign beat, this non-regional beat, to remain in compliance in one area while other areas are being detrimentally affected."

Richards earlier began by saying it was "a very difficult proposition" for senators to consider the bill in the time given.

The bill is titled the Miscellaneous Provisions (Trustees, Exchequer and Audit Act, the Minister of Finance (Incorporation) Act, Proceeds of Crime, Income Tax, Companies, Partnerships, Securities, Tax Information Exchange Agreements, the Non-Profit Organisations and Mutual Administrative Assistance in Tax Matters) Bill 2023.

He said it was senators' duty to exercise due diligence on legislation, albeit amid the Government's urgency to pass the bill.

"I have to go through nine acts and the parent acts and match it against the proposed amendments here and make sense of it, in 72 hours."

"I think it's unfair. I think it's anathema to due diligence."

Richards said the prime ministers of TT, Jamaica and Barbados had all publicly lamented the scenario of "moving goalposts" for compliance with global regulation.

"The Caribbean and Caricom cannot continue to be slavishly dragged around the floor under these conditions, because very often we are not the ones who are most guilty globally of tax evasion, tax fraud, and being accused of being tax havens."

Richards quoted a source, Statistica, naming the world's worst tax havens. "The headline is The UK dominates the most damaging tax havens.' But they directing to us how we should jump and how high we should jump, and where we should jump."

He named the worst tax havens in order as: British Virgin Islands, Bermuda, Cayman Islands, Netherlands, Switzerland, Luxembourg, Jersey, Singapore, Bahamas, Hong Kong, Ireland, UAE, UK, followed by others. Countries losing the most to tax abuse were Ireland (22 per cent of GDP), Colombia (18 per cent of GDP), Singapore (ten per cent), etcetera. The worst loss by international tax evasion occurred in Malta, Cyprus and Latvia.

Richards said countries like TT had to fall in line with large countries in order not to be black or grey listed such as by loss of correspondent banking.

He urged Caricom to do more to address this.

Richards noted Imbert citing the Financial Intelligence Unit (FIU) reporting $1.93 billion in suspicious transactions in 2021, reportedly an improvement over the previous reporting period. He urged the publishing of more details in this figure.

Richards wondered how the bill's provisions were affecting the ability of regional governments and businesses to function, before considering the plight of NGO's.