RP gets thumbs down for weak anti-money laundering bill

RP gets thumbs down for weak anti-money laundering bill

Mynardo Macaraig, Agence France-Presse, Manila

Industrialized countries have rejected amendments by the
Philippines to beef up its anti-money laundering law, giving
Manila less than a month to pass better legislation or face
painful sanctions.

The threat by the Paris-based Financial Action Task Force
(FATF) came at the weekend after the country's bicameral
legislature passed amendments to the Anti-Money Laundering Act
that fell far short of the global group's demands.

"The FATF has taken the serious step of recommending that its
members impose additional counter-measures against the
Philippines, due to the failure of the Philippines to enact
legislation to address previously identified deficiencies in
their anti-money laundering regime," the task force said.

The FATF, a global body for fighting money laundering, gave
Manila until March 15 to pass stiffer amendments or be hit by
countermeasures.

In reaction to the FATF's disapproval, Central Bank of the
Philippines governor Rafael Buenaventura said: "Well, it doesn't
come as a surprise."

The government of President Gloria Arroyo had been pushing for
the necessary changes to the anti-money laundering law for months
but the Senate watered down the amendments in defiance of the
FATF.

Arroyo, aware that the amendments would not pass muster, had
declined to sign the bill into law.

"We have a small window between now and when the
countermeasures take effect within which we can cure (the
problem)," Buenaventura said.

Failure to meet the deadline would result in sanctions that
would delay financial transactions. Bankers, traders and
investors would be hit but the most seriously affected would be
the seven million Filipinos working overseas who remit their
salaries back home to their families.

Consultancy group Accelerating Growth Investment and
Liberalization with Equity has estimated that families of
overseas workers could lose as much as 19.8 billion pesos
(US$366.7 million) a day due to delays in remittances if
sanctions are imposed.

The FATF's main bone of contention is a requirement in the
present law that money-laundering probers must get a court order
to look into suspicious bank accounts. It wants to remove the
need for a court order.

Twelve of the 23 senators voted against lifting the court
order requirement, despite pressure from the House of
Representatives.

The court order requirement had made the existing anti-money
laundering law largely ineffective as funds could easily be
transferred out of suspect accounts before they could be opened,
observers say.

But the opposing senators charged that lifting it would allow
the government to harass political rivals and critics by checking
their bank accounts.

Senate President Franklin Drilon said the amendments could be
updated if the bill is returned to a bicameral conference
committee of both Houses so the senators can revise their version
of the bill.

"We can do something about it but we must address the issues
to our colleagues in the Senate who voted against the amendment.
Otherwise it will be the same result," warned Senate banking
committee chairman Ramon Magsaysay.

President Arroyo's spokesman Ignacio Bunye warned the
senators: "This is no joke. If the sanctions take effect, all the
transactions of our countrymen -- and we're looking at the seven
million overseas workers -- they will be delayed."

However Senate opposition leader Aquilino Pimentel remained
resistant, saying: "It really looks like our country no longer
has independence.

"We do not have the freedom to make laws that are for the good
of the people but must follow the FATF and the foreign agencies.

"Maybe the FATF will realize the Philippines is a democracy
and we cannot always follow their instructions," he said
bitterly.