Tougher AMLA rules
The noose has been further tightened around the neck of the country’s money launderers.
Last Monday, President Aquino signed into law two of three measures that the Financial Action Task Force earlier asked of the Philippine government to show its support for international efforts to fight money laundering and terrorist activities.
An inter-governmental body organized in 1989, FATF sets standards for the “effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.”
Initially, FATF focused its attention on money laundering, or the “washing” of money obtained through illegal means to conceal its true nature and allow its use for legitimate purposes.
Terrorist financing formed part of its action plan only in 2001 in the wake of the Sept. 11, 2001, attacks in the United States by terrorist groups.
The new law authorizes the Anti-Money Laundering Council to examine suspicious bank accounts without giving prior notice to their owners.
Upon the council’s request, the Court of Appeals is obliged to issue a freeze order on the bank accounts concerned within 24 hours from receipt of such request.
Confiscation
With regard to terrorist financing, the other law punishes any person who provides, collects or uses property or funds to carry out or facilitate the commission of terrorist acts with prison terms and fines ranging from P500,000 to P1 million.
In addition, those properties or funds can be forfeited in favor of the government through civil forfeiture proceedings.
The forfeiture provision takes a leaf from the Racketeer Influenced and Corrupt Organization Act (or RICO law) of the United States, which authorizes the confiscation of all money, facilities and assets used for racketeering-related crimes.
The seizure is meant to put a stop or paralyze the criminal and his cohorts from committing similar crimes in the future.
Although the two new laws substantially conform to FATF’s recommendations, one item remains unfulfilled in its wish list—extend the coverage of reporting entities.
At present, the obligation to report covered (more than P500,000) or suspicious transactions to AMLC is limited to the following entities: banks and other entities supervised by the Bangko Sentral ng Pilipinas; insurance companies and other institutions supervised by the Insurance Commission; and securities dealers, pre-need companies and other entities supervised by the Securities and Exchange Commission.
Laundering
The common denominator of these companies is they solicit and receive funds from the public that, in turn, can be invested elsewhere or lent out for profit.
The solicitation and re-channeling process provides an opportunity for dirty money to be placed in the financial system and, after going through the washing procedure, be treated as coming from legitimate sources.
Through the reporting requirement for covered and suspicious transactions, AMLC can spot and foil attempts to launder dirty money through the companies mentioned.
FATF does not, however, believe the avenues for money laundering activities have been fully covered by our existing laws to meet its objective of putting an end to money laundering and terrorist financing.
It wants to widen the net to include gambling casinos, foreign exchange centers, precious metal traders and other related entities capable of being used, wittingly or unwittingly, as conduits for the movement of dirty money in the financial system.
The expansion of the coverage of entities that shall be placed under AMLC’s watch poses serious problems of enforcement and practicality.
Customers
The reporting requirement rests on the “Know Your Customer” policy, i.e., the covered entity should know the name, address, character and other relevant information about its clients or customers.
Through those data, the anti-money laundering authorities can run after clients or customers who, based on the reports submitted to AMLC, may have violated its rules.
Frankly, can we expect big-time gamblers to give accurate information about themselves when they go to casinos? No high roller would want his name and winnings reported to the AMLC lest he attract the attention of the tax authorities and criminal elements.
China is a member of FATF and, if FATF reports are to be believed, is compliant with the reportorial and monitoring obligations on anti-money laundering.
Really now! Do you believe the gambling casinos in Macau, Hong Kong and Shanghai honestly report to their regulatory authorities the winnings of wealthy and politically influential Chinese high rollers?
Sadly, the Philippines has no choice but give in to FATF’s demands on the expansion of covered entities. Defying its dictates would result in sanctions that will adversely affect the ability of our OFWs to promptly send their remittances to their families in the country.
So who else may be swept by FATF’s self-righteous crusade? Mom-and-pop lending companies, market vendors, tiangge operators and junk shops?
Might as well include hookers to complete the joke!
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