GMA signs anti-laundering law

President Arroyo signed into law yesterday the country’s first ever measure to criminalize money laundering, beating a deadline by one day and avoiding potentially disruptive sanctions by the international financial community.

In a signing ceremony at Malacañang, the President said the passage of Republic Act 9160, or the Anti-Money Laundering Law, now empowers the government to clamp down on the previously unchecked flow of dirty money from the illegal activities of grafters, drug lords, kidnappers and terrorists.

"The law underscores our policy to make the banking system more robust by not allowing the Philippines to be used as a money laundering site by local or international criminals," Mrs. Arroyo said. "It affirms our policy that the country will participate in international efforts to curb money laundering on a global scale."

Prior to the signing, the President said the law allows the government to go after crime syndicates such as the Japanese Yakuza and the Chinese triads as well as groups that channel funds for terrorist activities.

"The shocking Sept. 11 tragedy in the US gives everyone a gruesome picture of what can be funded with laundered money," she said.

Later, a beaming Mrs. Arroyo thanked and lauded members of Congress for their statesmanship in the speedy approval of RA 9160, entitled "An Act Defining the Crime of Money Laundering, Providing Penalties Therefor and for Other Purposes."

She affixed her signature to RA 9160 at exactly 5:50 p.m. when the printed enrolled bill finally arrived at Malacañang.

Congress was in a mad scramble this month to hammer out a final version of the measure to beat a Sept. 30 deadline imposed by the Financial Action Task Force (FATF).

Members of the bicameral conference committee unanimously approved the consolidation of Senate Bill 1745 and House Bill 3038 late Friday and immediately transmitted the report for ratification by both chambers of Congress.

The FATF, an international watchdog of the Organization for Economic Cooperation and Development (OECD) member states, has threatened to punish the Philippine government unless it rids the local banking system of its image as a haven for dirty money.

Speaker Jose de Venecia said the law approved by the bicameral conference committee at midnight Saturday, met and exceeded basic requirements of the FATF.

"We have criminalized money laundering in support of the major global campaign against the evil empire of the narcotics syndicates and terrorists," De Venecia said.

Senate President Franklin Drilon said the Anti-Money Laundering Act meets international standards and domestic requirements while striking a balance between police powers of the state and the freedom of depositors.

Senators Ramon Magsaysay Jr. and Francis Pangilinan, principal authors and sponsors of the measure, said the authority to freeze suspicious accounts without any court order is at the very heart of the law on money laundering.

Under the new law, money laundering is defined as a crime whereby proceeds of an unlawful activity are transacted by making them appear to have originated from legitimate sources.

Covered are single, series or combination of transactions involving a total amount of P4 million, or an equivalent amount in foreign exchange based on the prevailing rate. These include cash deposits and investments that are not commensurate with the business or financial capacity of the client, have no credible purpose or origin, and underlying legal trade obligation, purpose or economic justification.

The P4-million threshold is a compromise between the P5 million approved by the House and the P3 million approved by the Senate.

A bank is required to report to the Anti-Money Laundering Council (AMLC) a questionable account within five days from its occurrence. The AMLC, composed of the governor of the Bangko Sentral ng Pilipinas, the commissioner of the Insurance Commission, and the chairman of the Securities and Exchange Commission, is the implementing body of the measure.

The AMLC will issue a freeze order, effective immediately, on a suspicious account if it finds probable cause that it is related to an unlawful activity. The freeze is for 15 days but may be extended by an order of the regional trial court. The order cannot be the subject of a temporary restraining order by an RTC.

Notice to the depositor of the freezing of his account will be given simultaneous with the freeze order. The depositor has 72 days to justify the source of his fund. If the AMLC is not satisfied with the explanation, it may seek a court order to look into the account. A court finding that the account is laundered money will result in its forfeiture in favor of the government.

The Anti-Money Laundering Act specifies 14 illegal activities: kidnapping for ransom, illegal drugs, graft and corruption, plunder, jueteng and masiao, piracy on the high seas, qualified theft, swindling, smuggling, cybercrimes, hijacking, destructive arson and murder, violations of the Securities Regulation Code, and felonies or offenses of a similar nature punishable under the penal laws of other countries.

Pangilinan said that the crime of plunder was included upon insistence of the House panel headed by Misamis Oriental Rep. Oscar Moreno.

"Congressman Moreno said it would be ludicrous for us to include the crime of swindling but fail to include the more serious crime of plunder, and we agreed," Pangilinan said.

Another key provision of the law prohibits its use for political persecution or harassment or as an instrument to hamper competition in trade and commerce.

It states that "no case for money laundering may be filed against, and no assets shall be frozen, attached or forfeited to the prejudice of a candidate for an electoral office during an election period."

A person convicted of the crime of money laundering will be meted a prison term ranging from seven to 14 years and a fine of not less than P3 million but not more than twice the value of the monetary instrument or property involved in the offense. This is on top of the forfeiture of the assets of those convicted.

The new law takes effect 15 days after publication in the Office Gazette or in at least two national newspapers of general circulation.

However, provisions of the Anti-Money Laundering Act shall not apply to deposits and investments made prior to its effectivity.

Massive deposits, withdrawals in banks

The imminent enactment of the new law led to massive deposits and withdrawals as banking closed last Friday, a source from the House of Representatives said yesterday.

Citing official reports from the BSP, the source said those involved in the transactions were either clients who wanted to withdraw money to avoid being monitored or depositors who wanted to beat the passage of the law.

"It appears that there were two views. Some perceive the new law as something that could affect their deposits so they withdrew cash, while others are aware that the law will not be retroactive so they took advantage by pouring their available cash into banks," the source said.

Based on the reports, one depositor even issued a check for P1 billion against his account in a commercial bank, apparently to transfer the amount to a foreign bank. – With Efren Danao, Perseus Echeminada