Congress body OKs anti-money laundering IRR

The congressional special oversight committee has finally approved the implementing rules and regulations for the AntiMoney Laundering Act, bringing the Philippines one step closer to being removed from the non-cooperative countries and territories (NCCT) list of the Financial Action Task Force on Money Laundering.

The approval of the IRR was the last stumbling block to the full implementation of the AMLA, one of the major requirements of the FATF which put the Philippines in its NCCT list two years ago.

The AMLA underwent a major amendment last March, but it has not been implemented pending the approval and issuance of the IRR that would outline the specific provisions of the law, specifically bank inspection by the Anti-Money Laundering Council (AMLC).

The 32-page IRR was officialy approved and signed late Thursday by the committee. It is scheduled for official publication this weekend and takes effect immediately after publication.

The IRR will enforce the selective lifting of the Bank Secrecy Law, allowing the AMLC and the Bangko Sentral ng Pilipinas (BSP) to examine bank deposits and investments when investigating suspected money laundering and other crimes specified in the Anti-Money Laundering Act.

Under the rules, the AMLC is given the authority to file an ex-parte application for the issuance of a freeze order if, after an investigation, it determines that funds or properties were in any way related to any illegal activities covered by the AMLA.

Considering the "intricate and diverse web of related and interlocking accounts", the rules also allow the AMLC to apply to the Court of Appeals for the freezing, not only of the funds or properties in the names of the reported owners or holders, but all other related web of accounts.

Such a freeze order, according to the IRR, would be effective for 20 days but may be extended upon the application by AMLC.

Under Rule 10.4 of the IRR, related web of accounts were defined as those accounts originating from or related to the funds or properties named in the freeze order. After verification by the covered institutions that the related web of accounts originated from the monetary instrument or property subject of the freeze order, the IRR requires banks to freeze the related web of accounts "wherever these may be found."

Once frozen, the rules said the accounts cannot be unfrozen without securing official conformation from the AMLC.

The most controversial provision of the IRR, however, is the authority given to the AMLC to inquire into bank deposits under Rule 11 which exempts the council from the Bank Secrecy Law.

Under Rule 11, the AMLC can inquire or examine any particular deposit or investment with any banking institution or non-bank financial institution upon order of any court when the case involved is a specific violation of the AMLA.

Under the IRR, the AMLC needs only to establish "probable cause" that the deposits or investments were involved in the illegal acts listed in the law. On the other hand, the council does not need to secure a court order if it is inquiring into deposits and investments when any or all of the three primary crimes are involved, namely kidnapping for ransom, illegal drugs and hijacking.