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PHL beats FATF deadline; new ‘dirty money’ rules out

THE Philippines beat the Feb. 1 deadline set by the Financial Action Task Force (FATF) to enact tougher rules against money laundering and terrorist financing, the chairman of the House committee on banks said on Sunday.

The Anti-Money Laundering Council (AMLC) on Sunday published the updated implementing rules and regulations for Republic Act No. 11521, which further strengthens the Anti-Money Laundering Act (AMLA) of 2001.

President Rodrigio R. Duterte signed the law on Jan. 29.

“In so far as the timeliness is concerned, we beat the deadline,” Quirino Rep. Junie E. Cua, who heads the House committee, said in a phone call.

Mr. Cua said the immediate implementation of the law would support the country’s bid to avoid being “gray-listed” by the FATF.

Under the law, AMLC is allowed to enforce targeted financial sanctions, such as asset freezing, in relation to the proliferation of weapons of mass destruction and their financing.

“The AMLC, consistent with the Philippines’ international obligations, shall be authorized to issue a sanctions freeze order with respect to property or funds of a designated organization, association, group or any individual to comply with the binding terrorism-related resolutions,” the council said under Regulatory Issuance No. 2.

The updated rules empower the Anti-Terrorism Council to designate covered persons, following provisions of the controversial Republic Act No. 11479 or the Anti-Terror Act of 2020. This is in addition to persons and groups mentioned in the consolidated list of the UN Security Council.

The AMLC can direct covered persons and government agencies to immediately freeze assets, property or funds, and related accounts of groups and individuals “without prior notice” based on provisions of the new anti-laundering law and the new anti-terror law.

Once a freeze order takes effect, all transactions, conversions and moving of funds and assets will be blocked unless they qualify as “authorized dealings,” the AMLC said.

This means frozen accounts will only be allowed to perform payments necessary for costs of administrative and judicial procedures that occurred before the designation of an individual or group.

Moreover, “humanitarian exemptions” or transactions meant to support sustenance, family needs and medical procedures of designated persons and groups will be allowed to be carried out through frozen accounts.

“These [humanitarian exemptions] are features proposed by the Senate. We agreed to accept that because I think it’s fair in the spirit of humanitarian reasons,” Mr. Cua said.

AMLC’s revised regulation also provides for lifting of a freeze order in case of mistaken identity, following provisions of the Anti-Terror Act. Delisting that can occur upon the request of foreign or international jurisdictions could also result in the lifting of a freeze order.

The updated rules likewise allow groups or people to file a petition before the Court of Appeals to determine the basis of a targeted financial sanction against them within 20 days.

Last year, several lawsuits were filed against the anti-terror law, saying it is unconstitutional and could violate human rights.

In December, freeze orders on bank accounts and assets of the Communist Party of the Philippines and the New People’s Army were issued following their designation as terrorists by the ATC. The same order was given for accounts and assets linked to local and international Islamic extremist groups.

The FATF gave the Philippines one year to address gaps on anti-money laundering and counter-terrorism financing and to implement these tighter measures. The original Oct. 1, 2020 deadline was moved to Feb. 1 due to the pandemic.

The country was removed from the FATF’s gray list in February 2005, five years after its inclusion in 2000. Officials have warned that going back to the list could affect remittance and investment flows due to more stringent processes and cross-border financial documents. — Luz Wendy T.Noble

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