On April 28, Transparency International (TI) Georgia and partner organizations wrote an open letter to the Government (Prime Minister, Ministers of Economy and Sustainable Development, Finance and Justice) and Parliament (Chair of Parliament, Chair of the Committee on Budget and Finance) to register their position of concern with regards to the proposed legislation that would transfer Georgia's Financial Monitoring Service from under the management of the National Bank to the Executive Branch. This initiative was proposed by Mr. Davit Onoprishvili, Chair of the Parliamentary Committee on Budget and Finance. We are highly concerned with the principle, the process and the timing of this legislation and we feel the change threatens the continued success of this institution.

As discussed in the letter, the FMS management should not be transferred to executive control for the following reasons:

• A system of checks and balances, in which political institutions control each other, and safeguards to protect and ensure the integrity of commercial information, which are in place in most European countries, are often weak or absent in Georgia, and the system of personal data protection is not fully operational.  

• The handover is even more controversial considering that, despite a few problematic issues, MONEYVAL’s 2012 assessment of the FMS was for the most part positive, and highlighted the progress that had been made in a number of areas compared to their previous assessment in 2007.

• The independence of the Georgian judiciary has been strengthened, however, the system must be further reformed to enjoy a degree of independence that is comparable to the degree of independence of the judiciary in most of the countries where FIU-s are under executive control.

The reasons why the current institutional arrangement helps guarantee the independence of the FMS are that:

• It has the autonomy to pursue its role as an independent legal entity of public law (LEPL) within the National Bank, an independent body;

• The head of the FMS is appointed by the prime minister in agreement with the board of the National Bank;

• The FMS is financed by the National Bank rather than the state budget.

This draft law proposes to change much of this institutional arrangement and will not guarantee the operational independence of the FMS.

The separation of the Financial Monitoring Service from full executive management is essential to the stability and integrity of Georgia’s financial sector and provides a system of checks and balances that is crucial to the independence and perception of independence of the FMS. The FMS’s anti-money laundering investigations require access to confidential banking details and commercially sensitive information. This is the information that, for very obvious reasons, it is vital that the executive cannot control or have access to.

Therefore, TI Georgia and partner organizations urge a reconsideration of the passage of this law. It is our sincere hope that in light of very little, if any, stakeholder discussion or civic dialog regarding this legislation, Parliament will not pass this draft law and will find it in the best interest of the country to pull this legislation back for more thoughtful consideration.