How to safeguard the Philippines from dirty money

MANILA, Philippines — The flow of dirty money through Philippine banks and casinos can be stopped if government adds exemptions to bank secrecy and gives the Anti-Money Laundering Council (AMLC) the power to directly freeze accounts and monitor suspicious transactions in casinos.

This is the statement of Senator Teofisto "TG" Guingona III, who chairs the investigation on the $81-million Bangladesh Bank fund heist.

"It’s clear that when the money entered [the Philippines], there is a paper trail. It is traceable; but once it entered the casinos, there is a black hole," Guingona said in an interview in Manila Hotel, Manila City on Tuesday, March 22.  "It’s like a cave, totally dark, you cannot trace it anymore."

According to the Philippine senator, there are 3 steps for the country not to be involved in such cross-border electronic fraud and money-laundering scheme again.

These steps are including casinos in the jurisdiction of AMLC, providing AMLC the power to issue a cease and desist order, and adding exceptions to bank secrecy laws.

"We need legislation to include casinos so that AMLC would have the legal obligation and duty to report these transactions." Guingona said.

The law, which was first introduced in 2001, left casinos out of the list of entities required to report suspicious transactions to the AMLC. There were efforts in the Senate to include this provision in the amended AMLA in 2013, but this was blocked by some lawmakers, and PAGCOR. (READ: Casinos exempt from tougher anti-money laundering law)

Give AMLC power to freeze accounts

Guingona said the government should also provide AMLC the power to issue a cease and desist order, as this can be an effective stop-gap measure. (READ: 4 new names emerge at Senate probe into Bangladesh Bank heist)

"We have to look into the powers of the AMLC because they were only able to get a freeze order only on March 1, when there was a stop payment request already by February 8,” Guingona said.

The Bangladesh Bank sent a request for a "stop payment order" to RCBC on February 8, asking the local bank to refund the stolen funds or freeze the funds if these were not transferred yet.

But AMLC only got a court order to freeze accounts involved in Bangladesh Bank fund heist on March 1, days after securing a reply from the Office of the Solicitor General. (READ: Limited power restricts AMLC actions in Bangladesh Bank heist)

AMLC started its probe on the mysterious electronic theft on February 12.

"So February 8 to March 1, that’s a long period of time. They should have power to issue cease and desist, so that the banks will be mandated to hold the funds and freeze it without need of court action,” Guingona said.

Add exemptions to bank secrecy

Other than strengthening AMLC, Guingona said bank secrecy laws of the Philippines should be reviewed to safeguard the country from dirty money transactions. 

"We have to look at bank secrecy laws again. This was done a long time ago when the computers were not invented yet, but the laws are still there,” Guingona said.

"The basic principle there is bank deposits are secret then there are exceptions. Let us look at the exceptions and see if these are enough with the changing needs of the time,” the senator added.

Guingona said that if there is a criminal case, the government should lift the right to bank secrecy.

"If you notice during the first hearing, nothing much came up as most invoked their right to bank secrecy. But during the second hearing, because William Go gave his  waiver to his bank accounts, many important details came up,” the senator said.

The Senate blue ribbon committee will conduct its third hearing on the multi-million-dollar money-laundering case on March 29 when Kim Wong, who was linked to past scandal, returns from a medical treatment in Singapore. — Rappler.com