Earlier this month, as recommended by the Caribbean Financial Action Task Force (CFATF), the findings of Suriname’s National Risk Assessment (NRA) on anti-money laundering (AML) and Countering the Financing of Terrorism and Corruption were released. While money laundering is illegal in Suriname under a 2002 law that was later amended in 2016, the NRA indicates that the country is still plagued by insufficient awareness of the phenomenon of money laundering, and thus will face major challenges in the future. Completing the NRA represents a significant step with respect to Suriname’s integration into the global financial system, and in controlling transnational crime. However, Suriname is still in desperate need of a cleaner slate as it recovers from a profound economic downturn, the COVID-19 pandemic, and the rescheduling of nearly USD $4 billion in debt. Further adding to the sense of urgency, Suriname is poised to emerge as a major oil producer.
The NRA—which was submitted to the Central Bank of Suriname (CBvS)—was coordinated by Jennifer van Dijk-Solos, a member of the National Democratic Party who served as Minister of Justice and Police from 2015 until 2017. The U.S. Embassy in Suriname provided financial assistance for the project, which was managed through the Inter-American Development Bank. Although the NRA’s findings have been reported in the press, it remains a confidential document; however, another report is expected to be shared with the public. It is now up to the government to implement the report’s recommendations.
The NRA was conducted against the backdrop of a country that has increasingly become associated with corruption. Indeed, a 2017 United Nations Development Program (UNDP) report, Corruption Risk Assessment for Suriname, noted: “In Suriname, corruption is a systemic problem that is embedded in almost all structures, institutions, sectors, and transactions conducted among business domestic and foreign, as well as among citizens and the government.”
The UNDP report also documented how the following factors abet corruption in Suriname: a concentration of powers and weak or non-existent checks and balances; poor transparency surrounding executive decisions, combined with restricted access to information; unclear regulatory systems that allow for discretionary decision-making; weak systems of oversight and enforcement; and inconsistency in applying procedures and processes. Moreover, the UNDP report noted considerable gaps in overall mechanisms, transparency, and effort, highlighting the need for further legislative reform.
Part of Suriname’s problem has been the role of Dési Bouterse, a military strongman who came to power following a military coup in 1980. Despite being implicated in one of the most heinous episodes in Suriname’s history—the massacre of 15 of Bouterse’s political opponents in December 1982—Bouterse has remained a factor in the country’s political and economic arenas, even while out of power. His likely involvement in criminal activities was only reinforced in 1999, when Bouterse was sentenced in absentia in the Netherlands for cocaine trafficking. In November 2019, he received a 20-year prison sentence for the 1982 massacre, a ruling that he then appealed.
Bouterse was elected to the presidency in 2010 and re-elected in 2015. The Bouterse years (2010-2020) were marked by a high degree of corruption, illicit financial activities, and money laundering, which would ultimately implicate Bouterse’s last Minister of Finance, Gillmore Hoefdraad. Mr. Hoefdraad, who was charged with eleven criminal offenses, including violations of banking and anti-corruption laws, fraud, and embezzlement, remains on the run from authorities. The former head of the CBvS, Robert-Gray van Trikt, was also jailed in connection to these crimes.
As one can glean from local press reports, the 2021 NRA flagged many of the same problems as the 2017 UNDP report, reflecting the extent of the dilemma facing the new government elected in May 2020:
- Drug trafficking is the greatest threat to legality, transparency, and stability, with Suriname functioning as a transit point for cocaine from Colombia and Venezuela destined for Europe;
- There is an active illegal trade in gold and timber;
- The trading of narcotics, gold, and timber is regarded as the principal channel for money laundering and corruption in the country. As one of the report’s contributors noted, “It can be concluded that deep-seated institutional corruption helps to maintain drug trafficking in Suriname. This makes it possible for criminals to continue to import and export drugs”;
- Two additional economic sectors regarded as “high risk” for money laundering and corruption are the used car industry and the small-scale jewelry business, both of which refused to participate in the NRA;
- The banking sector has the most regulations and supervision out of the sectors evaluated in the NRA. This is due to a number of earlier AML operations involving local banks, many of which occurred during the Bouterse years. Efforts to clean up the banking sector, while still imperfect, are viewed by international observers as a move in the right direction. (This progress in the financial sector helped the overall national assessment generate a grade of “medium risk”);
- Suriname has a legal framework for AML enforcement, but additional amendments need to be made in order to comply with international standards. Suriname did not pass or amend AML legislation in 2020;
- The NRA noted that the Foreign Exchange Commission is insufficiently aware of its role in preventing money laundering and terrorist financing. As one of the researchers noted: “Lack of awareness, expertise, capacity in this context, and a sound and compelling legal basis are the reason that the Foreign Exchange Commission can be called ineffective in the contribution to combating or preventing the aforementioned crimes”;
- Finally, Surinamese customs authorities do not duly focus on tackling unauthorized exports and imports of money, precious metals, and other tradable goods despite the Shipping and Tariffs Act—a mandate to propel the investigation of tax evasion, drug smuggling, contraband, and prohibited imports and exports. As one of the researchers stated, “In practice, Customs are not concerned with the illegal import and export of cash.”
Although the NRA indicates that Suriname has made some improvements with regards to combating money laundering and corruption, it also clearly stressed that considerable work remains to be done. As one local newspaper noted, “It has long been suspected that Suriname is looking the other way when it comes to accommodating money laundering practices. It is worrying that Suriname runs the risk of being blacklisted because the country does not adhere to the international anti-money laundering policy.”
The 2020 election ushered in a new government led by former police chief Chan Santokhi, resulting in considerable hope that the country would turn a corner on the corruption of the Bouterse years. However, as the NRA underscores, the size and scale of the cleanup in Suriname is substantial and requires political will from the highest levels of the government. In the face of the new government’s appointment of family members to various government posts, and Vice President Ronnie Brunswijk’s 2000 criminal conviction in the Netherlands for cocaine trafficking, many Surinamese are skeptical about how far reforms can go under the Santokhi administration.
Another factor contributing to this uphill battle is the limited participation of civil society in the fight against money laundering and corruption. The scandal that rocked the CBvS in 2020—involving USD $100 million entrusted to the central bank by the country’s private commercial banks—decidedly raised the profile of corruption and financial crime among the Surinamese public. However, corruption is still widely tolerated. As the 2017 UNDP report noted: “There is also a high degree of tolerance for corruption. People are so convinced that it is an inevitable part of everyday life that they do not see out of the problem.” Indeed, many Surinamese need to see themselves as active stakeholders in their country’s development.
There is another factor at play. Suriname likely sits on the edge of following an economic trajectory similar to that currently being experienced by Guyana, where major offshore oil discoveries were made in 2015. Considering the significant commercial oil resources discovered off the coast of Suriname in 2019 and 2020, there is a strong chance that Suriname will soon join the ranks of petrostates, which in itself represents a considerable challenge.
The linkage between oil, money laundering, and corruption is twofold: Suriname’s long period of relative isolation from global geopolitical dynamics is eroding due to oil discoveries, while one of the more challenging dimensions of becoming an “oil state” is corruption. Simply stated, as oil production ramps up and revenues increase, temptation and greed tend to become problematic. One need only look to Angola and Nigeria—where billions of dollars have been laundered out of the country, ending up in bank accounts in offshore financial centers or in real estate—as examples of this process in action.
Suriname has the opportunity to benefit from its potential oil wealth, but corruption and money laundering must be controlled first. As international money laundering expert Bruce Zagaris notes, “Unless Suriname proactively tackles its widely reported problems of governance, transparency, and anti-corruption, it will not access external financial and technical assistance, and it will not realize its developmental potential, notwithstanding its significant natural resources.”
Efforts are being made to give more powers to the judiciary to handle corruption cases. The case against former Finance Minister Hoefdaard is also noteworthy in this regard, as is the completion of the NRA. That said, the hard work of dealing with deep institutional corruption and money laundering in Suriname is just beginning and appears poised to shape the country’s next decade.
Scott B. MacDonald is the chief economist at Smith’s Research & Gradings, founding director of the Caribbean Policy Consortium, Senior Associate at the Center for Strategic & International Studies, and a Research Fellow at Global Americans. He is currently working on a book on the new Cold War in the Caribbean.