By Luz Wendy T. Noble, Reporter
CONGRESS is rushing to finalize a bill that aims to strengthen the Anti-money Laundering Act of 2001 (AMLA), only two weeks before the deadline imposed by the Financial Action Task Force (FATF).
If it fails to implement tougher rules on money laundering by February, the Philippines may be included in the FATF’s gray list of countries deemed to have a high risk of money laundering and terrorism financing, and will be subjected to increased monitoring.
“The third reading in the Senate will resume [today]. We are scheduled for [the] Bicam[eral Conference Committee] on Tuesday,” Quirino Representative Junie E. Cua, who chairs the House Committee on Banks and Financial Intermediaries, told BusinessWorld in a phone interview.
“We want the business community to know that we are working on it. At the end of the day, we should be able to come up with an agreement,” Mr. Cua said.
House Bill 7904 was approved on third reading on Dec. 1, while Senate Bill (SB) 1945 is set to be approved on third reading as Congress resumes session today (Jan. 18).
“The deadline remains: The country seeks the support of Congress to pass a sufficient law and it must take effect by Feb. 1, so that the Philippines will not be publicly listed as a risk to the international financial system and suffer the economic consequences,” Anti-Money Laundering Council (AMLC) Executive Director Mel Georgie B. Racela said in a text message to BusinessWorld.
He noted both versions addressed most of the deficiencies in the AMLA, but the Senate version needs to be further tweaked.
“The Philippines cannot demonstrate satisfactory effectiveness if the Senate version is accepted in its current form, which will definitely mean the Philippines’ inclusion in the FATF ICRG (International Co-operation Review Group) gray list,” Mr. Racela said.
Mr. Racela said the House version grants more comprehensive investigation powers for the AMLC.
“Based on the Mutual Evaluation Report (MER), the grant of full investigative powers to the AMLC is critical in making it an effective financial intelligence unit,” Mr. Racela said.
The House version grants subpoena powers to the AMLC, but this is missing from the Senate version. Under SB 1945, AMLC is given the power to file warrants before the courts and to enlist other agencies for its investigation.
“It bears stressing that the deputation/enlistment power is already existing and is being exercised by the AMLC,” Mr. Racela said.
Mr. Racela pointed out a key recommendation of the Mutual Evaluation Report is the inclusion of real estate brokers and developers as covered persons, given FATF’s findings that dirty money proceeds have been used to purchase properties in many cases. The Senate version does not include real estate brokers and developers as covered persons.
“It must be understood that since real estate brokers and developers have direct contact with their customers, they are in the best position to execute anti-money laundering/counter-terrorism financing preventive measures in the sector as they are primarily involved in the buying and selling of real estate, where money laundering may occur,” Mr. Racela said.
The House version will increase the threshold of covered real estate single cash transactions to over P5 million, from the P1-million threshold that was initially proposed.
The House bill also integrated the P20-million threshold for tax crimes, which was agreed to by the Bureau of Internal Revenue (BIR). On the other hand, the Senate bill has a higher threshold of P25 million, which Mr. Racela said could “not be reasonable” and is “still the highest compared to various jurisdictions.”
President Rodrigo R. Duterte had certified as urgent the passage of the AMLA amendments, specifically mentioning the P20-million threshold for tax crimes.
“In addition, SB 1945 did not delete the ‘non-intervention with BIR affairs’ provision, which would be counterproductive to AMLC’s coordination efforts with the BIR when investigating tax crimes,” Mr. Racela said.
The Philippines was removed from the FATF’s gray list in February 2005, five years after its inclusion in 2000.
Government officials have warned the Philippines’ inclusion in the gray list could affect remittances and investments, as cross-border financial documents and transactions will have to undergo more stringent processes and could result in delays of expected inflows.
The FATF’s recommendation in relation to counter-terrorism financing had already been addressed through the controversial R.A. No. 1149 or the Anti-Terror Act of 2020.