Laundering billions in dirty money

TWO POLITICIANS and one major bank were accused this year of laundering billions of pesos constituting the alleged proceeds of various crimes.

The latest involves Sen. Leila de Lima, who is presently accused of laundering up to P1 billion supposedly representing the proceeds of illegal drug transactions. Last May, then presidential candidate Rodrigo Duterte was accused of secretly maintaining bank accounts through which P2.4 billion worth of illegal transactions were allegedly made. Last February, the Rizal Commercial Banking Corp. (RCBC) was accused of facilitating the laundering of $81 million (P3.9 billion) in funds stolen by cyber-hackers from the account of Bangladesh with the US Federal Reserve Bank of New York.

De Lima is accused of receiving dirty money through the dummy bank accounts of her former staff, her driver, and the latter’s relatives. On the other hand, Mr. Duterte was accused of using the bank accounts of his children and ghost employees in laundering dirty money. And RCBC was accused of having allowed dirty money to be laundered through fake bank accounts that were opened with the bank.

The money laundering at RCBC has been established beyond doubt, and the bank has agreed to pay an unprecedented penalty of P1 billion. Criminal charges are being readied against the bank officers involved, and the US Federal Bureau of Investigation is currently securing witnesses for additional criminal charges in the United States.

On the other hand, Mr. Duterte was criminally charged in the Office of the Ombudsman by Sen. Antonio Trillanes during the election campaign. Since Mr. Duterte enjoys immunity from criminal prosecution as president, the criminal charges will not prosper until after his term expires. However, the Ombudsman can endorse to the House of Representatives any evidence that can be used for impeachment.

In De Lima’s case, Justice Secretary Vitaliano Aguirre has declared that criminal charges will be filed against her in connection with the laundered money supposedly collected in her behalf.

In all these scandals, the Anti-Money Laundering Council (AMLC) was in the spotlight. The AMLC was created in 2001 to monitor and prevent money laundering—or the process of making dirty money appear to have come from clean sources—in the country. Dirty money refers to the proceeds of crimes like corruption, drug trafficking, kidnapping, robbery, pyramiding, and “jueteng,” among others.

There are two ways by which the AMLC monitors and gathers evidence on money laundering.

First, business entities are required to report to the AMLC any “covered transaction,” or any deposit or investment of more than P500,000 per day. There is an obligation to report a covered transaction even if the depositor or investor is ultrarich like Henry Sy, Jaime Zobel de Ayala, or John Gokongwei. Thus, bank deposits of more than P500,000 per day in the name of Mr. Duterte or De Lima should have been reported to the AMLC as covered transactions.

Second, business entities are required to report to the AMLC any “suspicious transaction” even if the amount involved is less than P500,000. Suspicious transactions are deposits or investments which have no “underlying purpose or economic justification,” or the “amount involved is not commensurate with the business or financial capacity” of the depositor or investor. If a janitor who has a bank account with regular monthly deposits of less than P10,000 suddenly gets a deposit of P450,000 in one day, the huge deposit is a suspicious transaction that is required to be reported by the depositary bank to the AMLC. Thus, the AMLC can investigate the bank accounts of the alleged ghost employees of Mr. Duterte and the staff of De Lima as suspicious transactions.

The business entities that are required to report covered and suspicious transactions to the AMLC include banks, insurance companies, stock brokerages, investment companies, and jewelry dealers. Deposits, investments, or purchases made with these business entities, which fit the definition of covered or suspicious transactions, are required to be reported to the AMLC. Failure of these entities to make the report amounts to a serious crime.

If the AMLC determines that a covered transaction or a suspicious transaction involves proceeds of a crime, it can seek from the Court of Appeals an order to freeze and forfeit the deposit or investment. The AMLC can also initiate the criminal prosecution of the depositor or investor for violation of the Anti-Money Laundering Act, which carries a penalty of up to 14 years of imprisonment.

The AMLC has awesome powers, but its ability to use them is severely limited because it was designed by law to be functionally undermanned and consequently ineffective. The AMLC powers are wielded as mere part-time duties of three council members who are full-time heads of the Bangko Sentral ng Pilipinas, the Insurance Commission, and the Securities and Exchange Commission. Even the AMLC staff members are regular employees of the BSP. On top of that, the AMLC is underfunded yearly.

As a consequence, the AMLC has serious inadequacies to monitor and investigate thousands of covered and suspicious transactions that occur every day.

If it is staffed and funded commensurate with its duties and powers, the AMLC can become as potent as the current Office of the Ombudsman. Congress must amend the law by giving the AMLC full-time and independent commissioners and adequate personnel and budget. In its current form, it is not even a toothless tiger. It is an ant with a tiger’s teeth.

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