Laundering body freezes bank accounts of ‘boiler room’ firm

In its first test case since the enactment of the Anti-Money Laundering Act (AMLA) last September, the government’s Anti-Money Laundering Council has ordered a freeze on the bank accounts and other assets of a boiler room company raided last week.

Securities and Exchange Commission (SEC) Chairman Lilia Bautista said the freeze order initially covered more than P15 million deposited in five different banks under peso and dollar accounts Price Richardson Corp., its director for operations Consuelo Velarde-Albert, and an unidentified foreign salesman.

Last Friday, Nov. 16, a composite team of SEC, National Bureau of Investigation (NBI) and Bureau of Immigration and Deportation (BID) officials, along with the Interpol, simultaneously raided six offices of Price Richardson in Makati by virtue of a search warrant issued by the Makati Regional Trial Court, the sixth incidence a crackdown on suspected boiler room operations this year.

The AMLA Council, made up of the SEC, the Insurance Commission and the Bangko Sentral ng Pilipinas, subsequently issued a 15-day freeze order last Tuesday to check on the disputed bank accounts, most of which are in HSBC, China Banking Corp. and Citibank.

Bautista said the council will then have to go to court to extend the freeze order beyond 15 days upon which a formal court case would have been filed.

Aside from the bank accounts, the trading team seized and confiscated other documents and equipment such as computers, landline phones, and cellular phones from the Price Richardson offices.

The Anti-Money Laundering Act was passed by Congress and signed into law by President Arroyo last Sept. 30 in response to the inclusion of the Philippines in the list of non-cooperative countries and territories against money laundering issued by the Paris-based Financial Action Task Force (FATF).

The term "money laundering" covers all transactions designed to conceal the origin or to change the identity of money obtained from criminal activities, such as drug trafficking and smuggling, so that it would appear to have originated from a legitimate source.

Price Richardson, which was incorporated only in December 2000, was registered as an administrative services company offering clerical, bookkeeping, mailing and billing services.

But upon investigation, it was found out that its personnel – made up of 22 mostly Canadian and British nationals – deal in registered securities without the necessary licenses. One of the salesmen allegedly duped his clients of more than $127,000 in only six months of operations.

Since the SEC and the NBI forged an agreement last April to intensify efforts to curb the boiler room activities of a growing number of companies, there have been five previous raids on the corporate offices of Mendez Prior, Dukes and Co. Inc., Evergreen, the Barclays Group and Goldberg.

Aside from court cases, the SEC has issued cease-and-desist orders (CDO) against 21 other firms engaged in the same practice, some of which are related to the five abovementioned companies.