Money laundering measure pushed

Philippine banks say their customers, and the economy, could suffer if the government does not move swiftly to pass a bill to fight money laundering.

The Paris-based Financial Action Task Force, backed by most industrialized nations, says the Philippines is one of 17 countries it considers "uncooperative" on the issue.

It has given the government until the end of next month to pass a law to combat the laundering practices, or face much tougher scrutiny of its banking transactions.

Perhaps aware of this deadline, the House committee on banks and financial intermediaries is in the process of consolidating all anti-money laundering bills to draft a comprehensive law that will be used in a crackdown on criminal syndicates operating in the country.

Manila Rep Jaime Lopez, chairman of the committee, said his panel has invited resource persons from the Bangko Sentral, Bankers Association of the Philippines (BAP) and the Department of Justice to share their expertise as the proposed measure is drafted.

"The anti-money laundering law will hit the Achilles heel of criminal syndicates," he said.

BAP executive director Leonilo Coronel said some foreign banks have already been curtailing correspondent services previously offered to Philippine counterparts.

"Some correspondent bank services that have previously been offered, for instance some remittance or clearing services, have already been terminated," Coronel told Reuters.

He declined to identify the banks involved, although Bangko Sentral ng Pilpinas (BSP) Governor Rafael Buenaventura earlier this week cited US-based First Union Bank of Delaware as one institution that was taking a tougher line on Philippine transactions.

Chinatrust Commercial Bank Corp. president William Go said there was a high likelihood of increased costs for bank customers if transactions took longer to process because of tighter international scrutiny.

Currently, it takes one to two days to clear remittances.

"If any remittance requires any special attention there is always an extra cost ... and it would be passed on, they (banks) would not absorb it," he said.

Consolidated version

Under the consolidated version of the House bill, banks are compelled to report "suspicious bank transactions to the monetary board which in turn will determine the origin of the money," Lopez said.

He said to give more teeth to the law, penal provisions will be included, such as the imposition of stiff fines and penalties on banks that fail to report transactions that turned out to be money laundering activities of criminal syndicates.

He said after the bill is consolidated, it will be brought to plenary debate for early approval.

The Manila congressman said the Philippines has been among the countries where organized crime groups have been pouring money sourced from drug trafficking, kidnapping, smuggling and similar activities.

Other countries which have been noted to be money laundering centers are Panama, Bahamas, Lebanon, Pacific Island countries and Russia, which is considered the haven of global syndicates.

He said both houses of Congress must come out with an anti-money laundering law to improve its image in the international community because otherwise, business transactions here will suffer.

"Every business transaction will be scrutinized in the international market to insure that money circulating is not tainted," he said.

Buenaventura also worried that trade and industry would be affected if no law against money laundering is passed. Go agreed.

"If we are an international pariah, we are not considered cooperative, that may slow down investment because if you are in search of foreign investments because of high costs in your home country, you would want a place where you could easily remit funds in and out ... eventually trade would be affected as well," Go said.

The chances of passing the bill before September look remote, even though President Arroyo said yesterday she was confident of meeting the deadline because of her coalition’s majority in Congress.

In the past, Congress has been divided on the issue, with some senators fretting about a potential loss of account confidentiality.

"The challenge now is to come up with legislation that is fair and that is livable with under the conditions of this country," Coronel said.

For his part, Iloilo Rep. Augusto Syjuco urged the people to support all efforts of the government to curtail money laundering.

"It is high time we put an end to this vicious cycle of putting criminal proceeds into the mainstream of the legitimate business industry. We must exert our best efforts to pass a measure that would criminalize money laundering and provide specific safeguards to ensure that criminal profits will not find safe haven in Philippine shores," he said in a television interview.

Syjuco is one of the principal proponents of the proposed measure seeking to create the National Anti-Money Laundering Board and criminalize the act of money laundering, a bill which the Palace said is a priority. — Perseus Echeminada