Lest it be forgotten amid the country’s preoccupation with the coming elections, the issue of the Philippines becoming a “destination” of dirty money persists, and continues to put the country at risk of being blacklisted by the Financial Action Task Force (FATF) against money laundering.
A respected banking and finance lawyer has, in fact, pointed out that it is during the election season when the Anti-Money Laundering Council (AMLC) should be particularly wary of money-laundering activities because it is when dirty money is often suspected to flow into the country and constitute the war chest of candidates.
Ironically, however, the Philippines’s own antimoney-laundering law is too solicitous of the welfare of politicians, that it prohibits the filing of an antimoney-laundering case during an election period.
Under Section 16, even legitimate antimoney-laundering cases cannot be filed against a candidate during an election period because they could be mere “political harassment.”
Section 16 provides that: “This Act shall not be used for political persecution, or harassment, or as an instrument to hamper competition in trade and commerce. No case for money laundering may be filed against and no assets shall be frozen, attached or forfeited to the prejudice of a candidate for an electoral office during an election period.”
“During an election period, it’s a free season for money laundering,” said SyCip Salazar Hernandez & Gatmaitan managing partner Rafael A. Morales.
This is an irony, as he pointed out that in money-laundering cases, the quick enforcement of the law is necessary to stop the illegal activities, which might actually include terrorist financing, and possibly to recover the illicit money in favor of the true owner of such funds.
In the $81-million cyber heist of the Bangladesh government’s funds deposited in New York, which found its way into Philippine casinos, the money was first deposited with the Rizal Commercial Banking Corp. and was subsequently withdrawn before 10 days had lapsed, or even before the time the bank was required under the law to file a suspicious-transaction report.
This slow and prohibitive process of enforcing the law and recovering the money had again put the Philippines in a bad light, and Morales said he hopes these new developments will not put the country on the FATF blacklist.
However, there are already reports that Filipinos remitting money from abroad are being given a hard time in terms of additional fees and intensified frisking imposed on their transactions.
In an exclusive story of the BusinessMirror this week, Bangladesh Ambassador to the Philippines John Gomes vented his dismay over the slow process of recovering the “money of the hardworking people of Bangladesh.”
Insurance Commissioner Emmanuel F. Dooc, an ex-officio member of the AMLC, admits there are flaws in the antimoney-laundering law, and proposes several amendments relating to finance, such as the absolute lifting of the bank-secrecy law and adding teeth to the AMLC, which was rendered ineffective against money laundering due to some of the amendments passed in 2013.
Morales pointed out that in the original antimoney-laundering law passed in 2001, the AMLC was authorized to freeze immediately and unilaterally a bank account upon the mere determination of probable cause.
However, Republic Act 10365, which supposedly strengthened the law, actually weakened the AMLC by removing the power to freeze accounts. It gave that discretion to the Court of Appeals, upon a verified ex-parte petition by the AMLC.
“The antimoney-laundering law was designed not to work, because the interested parties are in Congress,” Morales said. “Have you ever heard of anyone being caught for money laundering except for General Garcia?” he asked, referring to retired Armed Forces of the Philippines comptroller Maj. Gen. Carlos Garcia.
The proposed amendments to the antimoney-laundering law, which was endorsed by the AMLC to Congress, include shortening the period within which covered entities should report suspicious transactions from the current 10 days to only five days. Casinos were also proposed to be included in the list of covered entities required to report these suspicious transactions.
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ERRATUM: To our dear readers, may I just make a correction that Mr. Morales, who is quoted in this article as the managing partner of SyCipLaw, has already retired from the said law firm as of end of March, and is affiliated with another law firm since. Thank you very much.