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- Category: Top News
- Published on Saturday, 02 March 2013 19:18
- Written by Lito U. Gagni
WHEN Congress resumes session after the midterm elections in May, the most important thrust of the administration would be to pass additional amendments to the Anti-Money Laundering Act (Amla) to ensure that the Philippines is not blacklisted.
Blacklisting of the Philippines by the Financial Action Task Force (FATF), the Paris-based global body in charge of scrutinizing anti-money laundering measures, means that the country’s 10 million overseas Filipino workers (OFWs) would have a hard time sending their remittances due to additional supporting documents they would need to furnish.
When the country was blacklisted 12 years ago, it was not only the OFWs who suffered. Businesses did, too, as countries either imposed sanctions in the form of stringent requirements or restrictive scrutiny of financial transactions from or to the Philippines.
The global effort to combat money laundering acquired traction with last year’s findings that HSBC bank affiliates all over the world allowed terrorists, drug cartels and criminals a portal into the US financial system. HSBC later paid $1.9 billion as penalty for letting itself be used in the money-laundering scheme.
According to Sen. Teofisto Guingona III, chairman of the Senate Blue Ribbon Committee, the next Congress would immediately set out to introduce the needed amendment to the Amla that was scrapped during the bicameral conference committee meeting: that of including casinos on the list of those to be subject to anti-money laundering scrutiny.
Guingona did not say why the casino amendment was scrapped but it was learned that it was on the instigation of a group which expressed fears that it would be inimical to the country’s tourism industry, which is just beginning to flourish.
It was also learned that the current “feverish efforts” to reinstate the casino amendment followed a visit here by a team from the FATF, which issued a veiled warning that all efforts of the government to escape the blacklist would be for naught if the casino amendment is not included.
“Our first act in the coming 16th Congress will be to introduce a fourth list of amendments to Amla to include casinos that were taken out from the Senate version at the bicameral conference level,” Guingona said. The inclusion of casinos was taken out when Republic Act 10365, the latest revision of the Amla, was enacted into law after a bicam deliberation.
Casino winnings are included on a watch list of the FATF, as these could come from illegitimate sources such as drugs, terrorist activities, corruption, bribery, etc. Criminals trying to hide the source of their wealth might resort to the casino winnings as a way to launder their money, and thereby escape prosecution.
Hedge funds are similarly watched, together with pension funds and even trust funds, as they could be made part of what the FATF term as a “money-laundering life cycle.”
Layering or moving the money to disguise its true origin, such as doing various transactions aimed at distancing the money from the original depositor, who is a drug syndicate leader or a member of a terrorist group or a business group that owns large sums of corruption-tainted money, is one such money-laundering measure that the FATF is guarding against.
Stock-market investments are also included on the watch list so much so that brokers are required to be extra vigilant in requiring their clients to disclose information. The brokers, like the banks, are also mandated to report suspicious transactions to avoid the sanctions from Amla.
One area of concern that the FATF is battling against is the integration of dirty money with clean money. Here the dirty money is mixed with legitimately sourced money and then placed in hedge funds, pension funds or trust funds.
The object of the integration is to hide the true source of the dirty money and after several steps, such as putting up a business, selling the same, and then resurfacing as an investor in a legitimate enterprise like a listed issue, then the money-laundering scheme is done.
With the integration and the layering, the laundering is completed and when anti-money laundering officials inquire into the wealth, then the paper trail on the buy-and-sell and investment route can be made as a legitimizing step.
(Photo by Alexandr Shebanov | Dreamstime.com)
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