The money-laundering threat in the country remained “high” during the past two years as the Anti-Money Laundering Council (AMLC) also flagged a “systemic” terrorist financing threat in the country.
“After considering the proceeds generated by select predicate crimes, money-laundering trends and techniques, the prevalence of sectoral threats and external threats, the national money-laundering threat is assessed to be high,” the AMLC said in its Second National Risk Assessment Report on Money Laundering and Terrorism Financing released last Friday.
Based on data covering the period 2015 to 2016, the AMLC said the vulnerability for money laundering at the national level was rated “medium,” while the money-laundering risk was assessed to be “medium-high.”
Among predicate crimes to money laundering, “high” threat arose from tax crimes; smuggling; copyright infringement and Intellectual Property Law violations; illegal manufacture and possession of firearms, ammunition and explosives; environmental crimes; investment fraud and estafa; violation of the Dangerous Drugs Law, as well as plunder and violations of the Anti-Graft and Corrupt Practices Act.
Assessed with “medium” threat were web-related crimes, trafficking in persons and kidnapping for ransom, other minor unlawful activities and predicate offenses.
Among sectors, the following sectors were rated with “high” money-laundering threat: Banks, money service businesses, designated nonfinancial businesses and professions as well as non-profit organizations.
Sectors with “medium” threat included securities and insurance.
The report also noted that the country “faces ‘high’ external threat as venue for money laundering.”
“For the period 2015 to 2016, the AMLC received a total of 153 requests for information (RFIs) and assistance from other jurisdictions, including 12 requests for mutual legal assistance. Based on the RFIs, fictional entrepreneurship and tax evasion are the topmost sources of illicit funds in 2015, while fraud is the topmost source for 2016. Countries of origin identified for these crimes are Kazakhstan and the United States of America,” the report said.
“In 2015 and 2016, about 98 percent and 70 percent, respectively, of the sectors involved in the inflow of illicit funds and/or dirty money were transferred or otherwise transacted using bank accounts and other products offered by the banking industry. The estimated amount of inflow is P608 billion. Money remittance businesses and securities trading participants were also among those mostly resorted financial sectors,” it added.
“The AMLC investigated money laundering cases involving proceeds allegedly derived from estafa, trafficking in persons, kidnapping for ransom and violation of E-Commerce Act cases sourced from abroad. These cases involve a total amount of more than P902 million of illicit funds from other jurisdictions,” according to the report.
Also, the report assessed “high” terrorism and terrorist financing threat during the two-year period.
“Terrorism threat in the Philippines is rated ‘high’ given the high number of violent incidents associated with terror/threat organizations. Prosecution of cases involving said groups are at a minimal level as compared to the number of incidents and victims recorded. For the period 2014 to 2016, there are 1,039 incidents committed by terrorist/threat groups. Regions 8 (Caraga), 5 (Bicol), Autonomous Region in Muslim Mindanao, 9 (Davao) and 10 (Northern Mindanao) recorded the most number of threat incidents,” it said.
Terrorist financing threat is rated “high” as terrorist/threat organizations in the country appear to have a systematic and established method of raising funds for their operations, and terrorist/threat organizations predominantly use illegal means to raise funds, with kidnap for ransom and extortion as the preferred means by terrorist/threat groups, the report said. While the total amount raised by these organizations remain largely unknown, the high number of threat incidents recorded by the Philippine National Police indicate that these terrorist/threat organizations are well-funded, the report added.
The report noted that threat groups also resort to legitimate means to raise funds.
“Among the fundraising methods used are the use of nonprofit organizations, family funding and legitimate business fronts. Use of funds are generally for operational purposes such as purchase of arms and vehicles. Threat groups from Southern Philippines used part of the funds raised to support the communities wherein they operate,” according to the report.
The report nonetheless said that the Philippine legal framework on terrorist financing has been assessed as “largely compliant” to the Financial Action Task Force’s standards with the passage of Republic Act No. 10168, which allowed the AMLC to conduct investigations on terrorist financing, and to freeze, without delay, all funds or assets related to terrorism.
As such, from 2015 to mid-2017, the AMLC froze P52.68 million in cash, P7.2 million worth of properties as well as 18 motor vehicles linked to terrorist financing cases, the report said.
“Further, despite the increasing incidents associated with the terrorist and local threat groups, statistics show that not many suspicious transaction reports (STRs) related to terrorism and terrorist financing were submitted to the AMLC Secretariat. Less than 1 percent of the total STRs received from 2014 to 2016 are filed on terrorism and/or terrorist financing. Transactions involved in the STRs related to terrorism and terrorist financing were mostly submitted by banks. Transactions mostly involved withdrawals and remittances which were in amounts ranging from P500,000 to a high of P91.9 million,” the report added. —BEN O. DE VERA