Philippine banks push for anti-laundering bill
Philippine banks push for anti-laundering bill
MANILA (Reuters): Philippine banks say their customers, and
the economy, could suffer if the government does not move swiftly
to pass a bill to fight money laundering.
The Paris-based Financial Action Task Force, backed by most
industrialized nations, says the Philippines is one of 17
countries it considers "uncooperative" on the issue.
It has given the government until the end of next month to
pass a law to combat the laundering practices, or face much
tougher scrutiny of its offshore banking transactions.
Several groups, including the Bankers Association of the
Philippines, are scrambling to try to have a law passed by the
deadline.
But BAP executive director Leonilo Coronel said some foreign
banks have already begun curtailing correspondent services
previously offered to Philippine counterparts.
"Some correspondent bank services that have previously been
offered, for instance some remittance or clearing services, have
already been terminated," Coronel told Reuters.
He declined to identify the banks involved, although central
bank governor Rafael Buenaventura earlier this week cited U.S.-
based First Union Bank of Delaware as one institution that was
taking a tougher line on Philippine transactions.
Chinatrust (Philippines) Commercial Bank Corp president
William B. Go said there was a high likelihood of increased costs
for bank customers if transactions took longer to process because
of tighter international scrutiny.
Currently, it takes one to two days to clear remittances.
"If any remittance requires any special attention there is
always an extra cost..and it would be passed on, they (banks)
would not absorb it," Go said.
Customers could reasonably demand higher interest payments for
funds sitting idle for up to a week while the banking parties
worked through the transaction, and that would eventually filter
its way through the whole banking system, he said.
Buenaventura is also worried that trade and investment would
be affected eventually by inaction on the issue. Go agreed.
"If we are an international pariah, we are not considered
cooperative, that may slow down investment because if you are in
search of foreign investments because of high costs in your home
country you would want a place where you could easily remit funds
in and out...eventually trade would be affected as well."
The chances of passing the bill before September look remote,
even though President Gloria Macapagal Arroyo said on Friday she
was confident of meeting the deadline because of her coalition's
majority in Congress.
Congress itself is notorious for its snails' pace passage of
legislation. A law liberalizing the country's electricity sector,
for example, took six years to put in place.
Coronel agrees the September 30 deadline is tight.
But he believes the timing is less important than clear
indications from Congress that it has the resolve and cohesion to
support legislation.
In the past, Congress has been divided on the issue, with some
senators fretting about a potential loss of account
confidentiality.