‘Surgery’ a must to root out shady companies, says SEC

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The Securities and Exchange Commission (SEC) defended its recent move to suspend nearly 118,000 corporations for their noncompliance with regular reporting requirements, which comes amid its own heightened efforts to combat financial crime. “It needs to be more than incremental steps. It should be surgery,” SEC Chair Emilio Aquino said on Friday.

Aquino said they were also boosting corporate compliance when it comes to the filing of beneficial ownership reports to unmask the true owners of companies. A beneficial owner refers to the person who ultimately owns and controls a corporation instead of the legal owner. The opaque ownership of corporations makes it more difficult to trace criminal activities such as money laundering and terrorism financing, one of the factors keeping the Philippines in the so-called “gray list” of Paris-based watchdog Financial Action Task Force (FATF).“Part of laundering is layering and if you are a bad guy trying to hide your money, you layer,” Aquino explained.

He said the SEC was aiming for a “tall order” compliance rate of 65 percent for the filing of beneficial ownership reports. This was after raising the figure to 50.7 percent from around 20 percent in the past.

The SEC on Friday expanded its fight versus laundering through the signing of data sharing agreements with the Philippine Drug Enforcement Agency, Insurance Commission, Cagayan Economic Zone Authority, National Bureau of Investigation, and Department of Justice. Other signatories were the Philippine Center on Transnational Crime, Department of Agriculture, Intelligence Service of the Armed Forces of the Philippines and the Philippine Economic Zone Authority. The failure of the Philippines to move out of the gray list could result in the country being downgraded to the FATF black list, which would result in higher fees for beneficiaries of overseas Filipino workers.

“The President wants us to get out of the gray list. Those that will immediately be affected [by a black list downgrade] are our OFWs who are remitting constantly,” Aquino said. —Miguel R. Camus INQ