Laundering dirty money

Sen. Richard Gordon, the inimitable chair of the Senate blue ribbon committee, claims (1) to have uncovered more than US$633 million (about P32 billion) in cash flown in by couriers via our airports, and (2) to have been offered (and refused) P20 million by a Filipino family that allegedly brought in $283 million (about P15 billion), in exchange for not being summoned to his panel’s hearings.

These are serious claims that should be further investigated. The first may constitute a violation of our Anti-Money Laundering Act (AMLA), Republic Act No. 9160 as amended. Or at least, it should trigger legislative actions to give the Anti-Money Laundering Council (AMLC) more powers to fight the laundering of “dirty” money.

As it now stands, the Philippines was given by the Paris-based Financial Action Task Force until October this year to strengthen our

AMLA and AMLC. Otherwise, the Philippines could be considered a “threat to the international financial system.” As a result, banking sanctions may be imposed, thereby making it more difficult for overseas Filipino workers to remit their foreign exchange and for our banks to relate to their correspondent banks abroad.

The second claim could constitute bribery. And as a responsible public official and citizen, Senator Gordon should bring the culprits to justice.

Let me tackle the first claim. Money laundering happens when the cash proceeds of an “unlawful activity” are transacted or attempted to be transacted to make them appear to have come from legitimate sources.

More simply, the “dirty cash” derived from certain “predicate crimes” are made to appear to be “clean money,” thereby concealing their true nature as the proceeds of the said “predicate crimes.” Once deposited in banks, the laundered money could be used to pay for land, buildings, shares of stock, or worse, to fund illegal drug dealings or terrorist activities.

Example: Kidnapping is a crime under our Penal Code. Depositing in a bank the ransom or cash received by the kidnappers is another crime under the AMLA. Kidnapping is the predicate crime, and laundering the ransom by depositing it in a bank is another crime punishable under AMLA.

The kidnappers are prosecuted and penalized separately from the money launderers. Moreover, additional malefactors could be prosecuted for money laundering only, like the bank officials who may not have participated in the kidnapping but who knew, or could have known, that the funds deposited were the ransom.

Not all laundering is illegal. It is illegal only when the proceeds come from the predicate crimes identified in the AMLA. These are: kidnapping for ransom, drug trafficking and related offenses, graft and corruption, plunder, bribery, malversation, carnapping, robbery and extortion, jueteng and masiao, piracy, qualified theft, swindling, smuggling, violations of the Electronic Commerce Act of 2000, hijacking, destructive arson, violations of the Securities Regulation Code, terrorism as defined under RA 9372, terrorism financing plus other crimes defined under the Terrorism Financing Act of 2012, and other crimes under special laws.

Is depositing funds derived from tax evasion money laundering? No, because tax evasion is not among the “unlawful activities” or predicate crimes under the AMLA. Of course, tax evasion can be prosecuted as a separate offense under other laws.

Aside from banks, money can be laundered through 1) foreign exchange dealers, pawnshops, money changers, remittance companies and similar entities supervised by the Bangko Sentral ng Pilipinas; 2) insurance companies, pre-need companies, and other companies supervised by the Insurance Commission;

3) securities dealers, brokers, investment houses, mutual funds, and certain entities supervised by the Securities and Exchange Commission; and other entities listed in the law.

Notably, under a new statute (RA 10927), “casinos, including internet and ship-based casinos, with respect to… a single casino transaction involving an amount in excess of five million pesos (P5,000,000.00) or its equivalent in any other currency” are now covered by the Amla.

I think Congress should heed the plea of Finance Secretary Carlos Dominguez III to include the proceeds of tax evasion under the AMLA and relax the bank secrecy law to fight money laundering and corruption more effectively.

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