Politically exposed persons
Big brother is watching.
This was the subliminal message Ombudsman Conchita Carpio Morales sent to public officials and government employees when she testified at the impeachment trial of Chief Justice Renato Corona.
Acting on a complaint for misconduct in office and unexplained wealth filed against Corona, she requested the Anti-Money Laundering Council to provide her office with records of Corona’s dollar transactions in local banks.
On the basis of the data submitted by AMLC, she concluded that Corona kept 82 dollar accounts in five banks between 2003 and 2011. A transactional analysis of the movement of funds among these accounts appeared to show that he owned at least $10 million.
Until Corona can present contrary evidence (mere denial will not suffice), the AMLC figures enjoy the presumption of regularity and accuracy. They were collated pursuant to AMLC’s authority to monitor the movement of funds in the banking system to prevent its use for illegal purposes.
Under existing laws, all bank transactions in excess of P500,000 are required to be reported by banks and related financial institutions to AMLC.
Described as “covered transactions,” information about deposits and withdrawals within that range, regardless of the manner by which they were made (e.g., cash, check, transfer or credit memo) have to be electronically transmitted to the AMLC database within the prescribed periods.
Investigation
Also required to be reported are “suspicious transactions” or movements of funds that, even if below the P500,000 plus threshold, raise serious doubts about the integrity of their source or legality of the purpose for which they are deposited or withdrawn.
Thus, for example, if a depositor who operates a small business and deposits P10,000 every week suddenly puts in P400,000 weekly, the bank is obliged to report these transactions as suspicious in character.
A similar report should be sent if, say, a depositor whose account balance hardly goes beyond P50,000 becomes the recipient of a P400,000 bank transfer from a foreign source.
The fact that a transaction is tagged as suspicious, however, does not mean that the deposit or withdrawal concerned came from an illegal source or is intended for unlawful purposes.
The description is aimed at putting AMLC on notice about a possible violation of the Anti-Money Laundering Law by the reported transaction. Once reported, the responsibility over it shifts to AMLC.
If AMLC’s database on suspected money launderers or intelligence reports on illegal money transfers indicate there is nothing fishy about the transaction, the report is simply kept on file.
The story is different if the erstwhile small depositor happens to be in the drug enforcement authorities’ watch list or the source of the money transfer is suspected to be a front for terrorists. AMLC has to conduct further investigation of the people involved in the transaction.
Objective
Although the rules are meant to apply equally to all persons covered by the reporting criteria, special attention is given by AMLC to “politically exposed persons,” or persons entrusted with a prominent public function or are closely related to them.
The bank deposits of these people are required to bear the “PEP” tag for reference when the regulators conduct their periodic review of the records of banks and financial institutions.
The red flag is a carryover from the rules of Financial Action Task Force on Money Laundering, the international body organized to coordinate global efforts to stop money laundering.
It is presumed that, on account of the PEP’s position and the influence he wields in the political scene, he “generally presents a higher risk for potential involvement in bribery and corruption.”
Thus, the unspoken rule in the banking community is to carefully monitor the inflow and outflow of funds in PEP accounts to make sure the bank does not get into trouble with the anti-money laundering authorities.
Paying hefty fines for violation of AMLC rules is bad enough. Being tagged as a conduit for dirty money or a willing participant in money laundering is worse. It will make the erring bank a pariah in the local and international banking communities.
Consequences
Despite the concerns expressed by some senators, the fact remains that the Ombudsman can compel AMLC to furnish it records of financial transactions of public officials and government employees even without the benefit of a court order allowing such disclosure.
The law is clear that such court approval is essential only if AMLC wants to examine the bank records of a depositor for possible violation of the Anti-Money Laundering Law and with prior notice to the depositor at that.
Sadly, the latter requirement, which is embodied in a Supreme Court decision, gives the depositor the opportunity to clean out his bank account before a freeze can be put on it by the Court of Appeals.
The loss of privacy in financial transactions by people who have chosen a career in government service, whether elective or appointive, comes with the territory.
Not only does the law allow it, the government employee gives his consent to such intrusion by signing the last paragraph of the Statement of Assets, Liability and Net Worth which authorizes the Ombudsman to look into his financial records.
If a person is jealous and zealous about keeping his financial life private and confidential, he should go into business or engage in private employment.
(For feedback, write to <rpalabrica@inquirer. com. ph>.)
