If criminal investigators drag their feet on corruption cases and Congress shirks its oversight duties, there is another way of going after crooks: follow the money trail.
All that money skimmed from public funds or pocketed from rural bank deposits and pre-need plans, all the fat commissions and “tong-pats” and P100,000 monthly “donations” meant for impoverished constituents, all that money has to go somewhere. And only a small amount can fit under one’s mattress.
Accomplished crooks have learned to break up their unexplained wealth, stashing away a portion, giving away some, and spending the rest.
The best crooks are wise enough not to attract heat through conspicuous consumption. They buy plush retirement homes, where each room has a large mattress, in Brazil or at the scenic border of Spain and Portugal — the easier, they think, to dodge the extradition police. They divide their cash among their spouse, children, and illegitimate families, depositing cash in numerous banks in the Philippines and abroad, with each deposit no greater than the threshold amount for triggering a money laundering alert.
Corrupt government officials and unscrupulous bankers aren’t the only ones who need to launder their wealth. Drug dealers, gambling lords, human traffickers, smugglers, terrorists, kidnappers, carjackers, robbers and other ordinary criminals need to launder their money.
If these crooks cannot be pinned down for their actual crimes, the country has an anti-money laundering police to prevent people from enjoying the fruits of crime.
Unfortunately, the Anti-Money Laundering Council (AMLC) is an under-funded, undermanned agency that was even emasculated by lawmakers who most likely feared that their hidden assets might be seized by the state.
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The AMLC is chaired by the central bank governor and has the heads of the Insurance Commission and the Securities and Exchange Commission as members. It has a secretariat composed of 63 officials and personnel, nine of them investigators and nine litigators. They must deal with an average of 400 alerts every month on possible money laundering cases.
Excluding personnel expenses, the council has an annual budget of only P10 million – a third of the annual pork barrel of one congressman.
The AMLC functions as a prosecution and civil forfeiture arm as well as a financial intelligence unit, yet it has no intelligence funds.
Created in 2001 following the enactment of Republic Act 9160 or the Anti-Money Laundering Act, the AMLC lost its power two years later to immediately freeze bank accounts for certain predicate crimes notably corruption. This amendment was introduced by congressmen, who made the AMLC apply for a freeze order first from a judicial court. If the court approves the application, it must then notify the affected bank depositor about the looming freeze.
Does this make sense? It does to lawmakers, and the crooks whose bank deposits must continue to be shielded by bank secrecy laws. It also made sense to the Supreme Court, which upheld the amendment.
The requirement for a court order to freeze suspicious bank accounts is set aside only when there is probable cause for cases involving drug trafficking and related offenses, kidnapping for ransom, terrorism, hijacking, and destructive arson and murder.
Requiring a court order are cases involving graft and corrupt practices, plunder, robbery and extortion, jueteng and masiao, piracy, qualified theft, swindling, smuggling, violations of the e-commerce act, securities fraud and stock manipulation.
Why were proceeds from those predicate crimes protected from an immediate freeze order by the AMLC? Only lawmakers can explain.
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The AMLC is now trying to restore its original power to freeze assets. If Congress insists on retaining the requirement for a court order, the AMLC wants to remove the need for the court to give the affected depositor prior notice. The depositor can be notified after the freeze and be given a chance to work for the lifting of the order.
The AMLC proposal also aims to expand coverage of anti-money laundering laws to casinos, including online casinos, real estate agents, and dealers in precious stones and metals.
Also to be covered are trust and company service providers as well as lawyers, notaries, accountants and independent professionals who willfully assist crooks in laundering their money.
This proposal aims to comply with recommendations made by the Paris-based Financial Action Task Force, which had originally included the Philippines among countries blacklisted as havens for money laundering. That blacklist prompted the passage of the Anti-Money Laundering Act and the creation of the AMLC, which was emasculated by Congress.
Apart from corruption cases, the AMLC wants no need for a court order to freeze assets in cases of fraud, malversation, forgeries and counterfeiting currency, human trafficking, sexual exploitation particularly of children, tax evasion, gunrunning, carjacking and environmental crimes.
The AMLC wants the power to immediately freeze suspicious bank deposits and assets for up to 30 days, which can be extended for up to six months with the approval of the Court of Appeals. Only the Supreme Court can issue a temporary restraining order on the freeze.
Upon determination of probable cause for money laundering, the AMLC also wants to do away with the filing of a covered transaction report, whose contents are strictly confidential, before it can initiate forfeiture proceedings through the Office of the Solicitor General.
Covered institutions that fail to report suspicious transactions, together with their directors and officers, will be slapped fines of P10,000 to P10 million, plus an additional P5,000 for every day of failure to comply with the amended law.
And to amend its meager budget, the AMLC wants to retain 25 percent of total assets forfeited, minus the cost of litigation. A system of incentives and rewards is also being proposed for government personnel and other individuals who help the AMLC in the investigation, prosecution and conviction of money launderers.
After protecting crooks through that 2003 amendment, and further emasculating the council through a miniscule budget, Congress can show its commitment against money laundering by giving more teeth to the AMLC.