THE House of Representatives on Tuesday evening approved on second reading a measure strengthening the regulations against money laundering, which is key to helping the country avoid being gray-listed by the Financial Action Task Force (FATF).
Anti-Money Laundering Council (AMLC) Executive Director Mel Georgie B. Racela said that House Bill 7904, which amends Republic Act No. 9160 (Anti-Money Laundering Act), may be enough to address deficiencies in current money-laundering regulations but could have been tighter on suspicious real estate transactions.
The FATF gave the Philippines up to February 2021 to address the deficiencies in the AMLA and implement regulations to improve its efforts to curb money laundering and terrorist financing. The original deadline was in October, but it was moved to February due to the pandemic.
President Rodrigo R. Duterte certified the urgency of the proposed anti-money laundering law amendments.
“This will prevent us from being gray-listed and that is very important to us. If we are unable to comply with the findings of the FATF, in so far as the effectiveness and efficiency of the AMLC is concerned, we might suffer the consequences of gray-listing, and that would mean higher cost of operations not only for our overseas Filipino workers, but also our businesses,” Quirino Representative Junie E. Cua House, chairman of the House Committee on Banks and Financial Intermediaries, told BusinessWorld on Wednesday.
Covered transactions under the bill include single cash transactions involving dealers of jewelry and precious stones and metals exceeding P1 million, cold cash exceeding P5 million for casino and real estate transactions of brokers and developers, and any other transactions that involved an excess of P500,000 in just one banking day. Such transactions will be under the tight watch of AMLC and can then be labeled as suspicious, depending on some grounds.
“It is closely and substantially similar to the proposal of the AMLC except for the increase in the covered transaction reporting threshold of exceeding P1 million (from the original bill) to exceeding P5 million cash transactions, ” Mr. Racela said in a text message to BusinessWorld.
Mr. Cua accepted the proposal to raise the threshold for covered transactions in the real estate sector from the P1 million backed by the AMLC. A group of developers and brokers earlier claimed such a low threshold would make reporting requirements more burdensome.
At a Senate hearing, Christopher Ryan T. Tan, a board adviser at the Organization of Socialized and Economic Housing Developers of the Philippines, Inc., had requested the exclusion of low-cost and socialized housing where price points are usually below P3 million for the covered transactions. Mr. Tan said they also did not agree to the initial P1-million threshold for covered transactions.
“The Senate says we don’t think of poor Filipinos, our answer is that poor Filipinos don’t bring in cold cash worth P1 million to purchase real estate. More so now that it was increased to P5 million cold cash,” Mr. Racela said.
Mr. Racela has said the inclusion of real estate brokers and developers as covered persons were considered as they have confirmed that launderers use proceeds from their transactions to purchase properties.
The counterpart measure of the House bill is still pending at the Senate Committee on Banks and Financial Intermediaries. Mr. Racela said the Bicameral Conference Committee will no longer need to convene if the Senate adopts the House version.
Under the bill, suspicious transactions involve a circumstance where “there is no underlying legal or trade obligation, purpose or economic justification, the client is not properly identified, and the amount involved is not commensurate with the business or financial capacity of the client.”
Taking into account all known circumstances, it may be perceived that the client’s transaction is structured in order to avoid being the subject of reporting requirements under the law.
The measure enhances and strengthens the investigative powers of the AMLC, particularly its subpoena and contempt powers.
In the conduct of its investigations, the AMLC may use investigation techniques available to other law enforcement agencies and only through court-approved searches and seizures.
It authorizes AMLC to preserve, manage and dispose of assets subject to freeze orders or asset preservation orders and to retain forfeited assets pending turnover to the government.
The measure also mandates the AMLC to facilitate the prosecution of persons involved in money laundering activities wherever committed by extending the government’s cooperation in transnational investigations on anti-money laundering cases and enforce targeted financial sanctions against individuals or entities involved in the financing of the proliferation of weapons of mass destruction, terrorism, and financing of terrorism as designated and listed under United Nations Security Council resolutions.
The measure likewise prohibits courts from issuing temporary restraining orders or writs of injunction against the AMLC in its exercise of freeze and forfeiture powers with the exception of the Court of Appeals and the Supreme Court.
Under the law, a person whose account has been frozen may file a motion to lift the freeze order and the court must resolve this motion before the expiration of the freeze order. No court shall issue a temporary restraining order or a writ of injunction against any freeze order, except the Supreme Court.
Mr. Racela is hopeful the revisions to the AMLA will be signed into law at least two months before the February deadline so they can still pursue other matters needed for the law, including its implementing rules and regulation.
“I am confident it [timely passage] will help but then again, it is not enough to just pass the bill into law, we must also demonstrate effective implementation of what FATF describes as positive and tangible progress,” Mr. Racela said. — Luz Wendy T. Noble, Kyle Aristophere A. Atienza with inputs from Charmaine A. Tadalan