Part One
SENATORS stung by the $81-million Bangladesh Bank cyber heist that dragged Philippine banks and casinos into the fray are close to wrapping up plenary deliberations to fast-track passage of a law plugging loopholes in the Anti-Money Laundering Act (Amla) to shield the banking system from potential sanctions by the Financial Action Task Force (FATF).
The Paris-based FATF is set to review in June next year the Philippines’s compliance with international safeguards against money launderers.
Sen. Francis G. Escudero confirmed that Congress is committed to frontload early approval of the remedial legislation that would finally include casinos in the list of covered institutions to make the Philippines compliant with the prescribed regulatory framework, in time for the upcoming assessment by the FATF.
The international watchdog earlier raised concern on the exclusion of casinos from the coverage of the existing law.
The subject has been a contentious issue. But it appears the inclusion of casinos in the law received an unintended boost earlier this year when the $81-million cyber loot stolen by hackers from a Bank of Bangladesh account in the New York Federal Reserve ended up in bogus bank accounts in Manila and were ultimately laundered in Philippine casinos and a local remittance center.
Expanding coverage
ESCUDERO acknowledged that another key consideration for ensuring the country does not run afoul of global regulators is the possible impact on millions of overseas Filipinos. He said these Filipinos may face difficulty transacting, especially when they remit earnings to their families back home. Filipinos abroad remitted over $25 billion last year, government data show. Bangko Sentral ng Pilipinas (BSP) data also showed that about $0.254 million was remitted from Bangladesh last year.
The Senate Committee on Banks and Financial Institutions, chaired by Escudero, has completed public hearings on proposed amendments to the Amla. The committee expanded the coverage of Republic Act 9160 to include remittance centers, as well as dealers of precious stones, jewels and metals and other high-value items or goods. The coverage would also include real-estate developers, brokers and sales agents.
Escudero indicated Congress is sure to approve inclusion of casinos among covered institutions required to report to the Anti-Money Laundering Council, under pain of sanctions for noncompliance.
In addition, the proposed Amla amendments he will ask Congress to adopt when he submits the Banks Committee report to the plenary on December 5 is the upward adjustment of the cash threshold for any covered transactions at “anything in excess of P500,000, or $10,000, or other equivalent monetary instrument.”
High value
ESCUDERO said the Banks Committee is, in effect, moving for the inclusion of “dealers or those entities, like lawyers and accountants, acting in behalf of clients whenever they receive cash for profit or gains, exceeding P500,000.” In an interview, the senators suggested that “if they don’t want to be covered by the antimoney-laundering law, then they should transact or act in behalf of their clients with checks, not cash.”
But he quickly clarified that “checks are already covered by the reportorial requirements of banks under Amla.”
Considered high-value items under the measure are the following goods or items, which value exceeds P1 million: motor vehicles, including land, air and water vehicles; art and antiques; and other luxury items, such as jewelry, watches and bags.
Escudero explains that in tightening the net, the committee opted to use “generic and catch all terms.”
He said this was intended to correct “ambiguous and evasive” terms used in the existing law.
“In the original act, it simply states jewelry, with 50 percent of its value coming from the precious stone used. But this is ambiguous and evasive,” Escudero said. “What if you are paying for the luxury brand itself and not the stones? Then that’s already left out.”
The senator disclosed there were also “strong calls to include luxury car dealers, but those who deal choppers and planes and yachts will also be left out, so we phrased the inclusion as high-value goods to cover all.”
Confidence
ESCUDERO assured that the committee also moved to endorse another key provision empowering the antimoney-laundering regulators to “investigate motu propio or upon the request of appropriate departments or agencies transactions deemed suspicious for possible money-laundering activities.”
He acknowledged that the AMLC is already empowered to directly file through the Office of the Solicitor General a petition before the Court of Appeals for immediate issuance of “a freeze order against any monetary instrument or property deemed laundered.”
The senator conceded, however, that the remedial legislation is not likely to be passed into law before lawmakers adjourn for the year-end Christmas recess. However, he expressed confidence the awaited bill will be enacted into law shortly after Congress resumes sessions in January.
“I am sure we will meet the June deadline [to pass the amending law],” he said adding they are targeting final passage of the remedial legislation in both chambers “in the first quarter of next year.”
Sanctions
IT was in August that regulators revealed that steps were undertaken to probe what the BSP called the “Bangladesh Bank cyber heist.”
In a statement, the Monetary Board said it “approved the imposition of supervisory enforcement action on RCBC [Rizal Commercial Banking Corp.] to pay the amount of P1 billion, in connection with the special examination conducted” by the BSP relating to the Bangladesh Bank cyber heist.
“This is the largest amount ever approved as part of its supervisory enforcement actions on a BSP supervised financial institution [BSFI],” the BSP said in a statement dated August 5. “This affirms the BSP’s strong commitment to ensure the stability of the country’s financial system through strong and effective regulation of BSFIs.”
Available records revealed that the bank heist occurred in February, wherein instructions to steal about $951 million from the central bank of Bangladesh—Bangladesh Bank—were issued via the Society for Worldwide Interbank Financial Telecommunication, or Swift, network.
Of the $101 million worth of transactions orchestrated by hackers, about $81 million was traced to the Philippines.
Image credits: Nonoy Lacza