Money laundering lair
Sen. Richard Gordon’s recent exposé on millions of dollars from China suspiciously entering the country did not come as a surprise to administration officials, especially the economic team and the Anti-Money Laundering Council (AMLC).
That’s according to Finance Secretary Carlos Dominguez III, who said the government had detected the “unrestricted influx of millions of dollars’ worth of foreign currency” and was investigating the sources and final destinations of the banknotes “flagrantly stashed in suitcases and brought into the country,” with the big possibility that these would be laundered here. Worse, he warned that the money could end up with international criminal syndicates or terrorist networks.
The money cited by Gordon could even be just a small portion of the foreign funds entering the Philippines; more dollars may be flowing in through the Philippine banking system. Gordon claimed that the amount of money brought into the country from September last year to March 2020 reached $633 million (more than P32 billion at the current exchange rates), with Chinese and Filipino couriers able to hand-carry more than $447 million into the country right through the Ninoy Aquino International Airport.
But if the government knew all along about this suspicious activity, why is the money flow seemingly allowed to continue unabated, or at least was allowed to reach the staggering magnitude that it did? Well before admitting it knew of the problem (after a senator had made it public), what was the Duterte administration doing about it?
Simply put, Chinese travelers are able to bring in scads of money because they can, and no law bars them from bringing money here as long as any amount beyond $10,000 is declared upon arrival. That appears to be a yawning gap in the law that needs to be looked into, not to mention the opportunity for corruption and extortion it makes available to airport personnel.
The government — through the AMLC — also claims it is officially hamstrung by stringent bank secrecy laws. Executive director Mel Georgie Racela of the AMLC Secretariat disclosed during a Senate hearing that they had flagged as suspicious at least P14 billion worth of Pogo (Philippine offshore gaming operators) transactions for possible money laundering from January 2017 to October 2019.
But nothing will likely come out of the government’s investigation into those funds. The reason is that the Philippines today is one of only two countries (the other being Lebanon) preventing the scrutiny of bank accounts, making the AMLC a very weak tool against money laundering and other unlawful activities.
The administration’s economic officials have acknowledged that the country’s laws have no teeth to investigate and prosecute these activities effectively, because of extra-tight bank secrecy regulations. They have urged Congress to amend existing laws and make tax evasion and other financial wrongdoings among the predicate crimes that would allow the AMLC to examine bank accounts after securing a court order.
Legislators have so far been slow to act on this proposal, but the recent revelations of likely dirty money flooding the Philippines and perhaps subsidizing the uptick in criminal activities involving Chinese nationals should prompt more forceful action.
In particular, it’s time to lift the antiquated absolute bank secrecy regulations in cases of tax fraud and other nefarious activities, so that the government can trace these funds with the help of anti-
money laundering agencies abroad and be able to run after the perpetrators of such financial crimes. Without such amendments, going after tax evaders and other criminals using dirty money for illegal activities would remain an uphill battle — the law ironically serving the interests of criminal syndicates to turn the country into a money laundering lair.
Closing the Pogo industry, which is mired in much criticism and controversy these days, will not by itself solve the problem of the country’s porousness to dirty money or the impression that the Philippines is proving to be a convenient hub for racketeering because of its airtight bank secrecy laws.
Dominguez has gone on record that the administration’s economic managers are ready to work with Congress on much-needed amendments to the antimoney laundering law. The ball is in the legislators’ court, where hopefully Gordon’s bombshell disclosures would lead to reform and greater accountability in bank secrecy practices.
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