RP under pressure to pass anti-money laundering bill

There are moves to step up the pressure on the Philippines to pass the anti-money laundering bill.

Some foreign correspondent banks of local banks have reportedly been unusually strict with transactions coming from the Philippines.

One local bank in particular, the Bank of the Philippine Islands, is reportedly being required to its correspondent bank in the US, to have its clients with transactions in the US, sign a document waiving the bank deposit secrecy rule. This will allow the foreign correspondent bank to openly scrutinize bank transactions of parties suspected to be engaged in money laundering activities.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Alberto Reyes said such move is apparently intended to put pressure on the Philippine legislature to act fast on a pending anti-money laundering bill.

Such persistence by foreign correspondent banks of local banks could spell inconvenience as well as unnecessary delays and their corresponding increase in transaction fees, according to Reyes.

"Transactions will be slower, for example if there are remittances to be made or other money transfer activities, and this will also be costlier because of the delays," Reyes said.

An interagency task force is drafting a new bill for the Arroyo administration, that will be one of the priorities of the administration’s legislative agenda when the 12th Congress opens next month.

The country is listed as one of the world’s money-laundering havens by the Paris-based Financial Action Task Force, along with other "uncooperative countries" such as the Bahamas, Cayman Islands, Israel and Lebanon.

One of the provisions attached to the anti-money laundering bill is that banks will be required to monitor transactions that do not have any apparent lawful purpose.

The passage of the anti-money laundering bill was also one of the new conditions required by the World Bank and its co-financier (Japan Bank for International Cooperation) for the release of the second tranche of the $600-million Banking Sector Reform Loan (BSRL).

As a result of the non-compliance by the Philippine government, it was forced to cancel or forfeit the loan. – Rocel Felix