Banking and finance officials have proposed to leaders of both houses of Congress to amend the country’s Anti-Money Laundering Act (Amla) and revise the bank deposit secrecy law for tax-evasion purposes.
The proposal was prepared jointly by the Department of Finance (DOF), the Anti-Money Laundering Council (AMLC) and the Bangko Sentral ng Pilipinas (BSP).
“Amendments to the Amla have been proposed in the last two years and were made more urgent by recent financial controversies that have exploited the weakness in the country’s tax and financial system’s legal framework: the Bangladesh Bank cyber heist involving a local bank and casinos; the Panama Papers exposing offshore bank transactions from across the globe that may have avoided or evaded domestic taxation; the “derisking” phenomenon, where foreign banks are closing the accounts of our money-transfer operators abroad, which may double the cost of remitting money to the Philippines,” the DOF said in a statement.
Among the more salient proposed amendments to Republic Act (RA) 9160, also known as the Amla of 2001, is to include casinos, among others, as mentioned in the Financial Action Task Force (FATF) recommendations, as covered entities under the law; as well as the inclusion of tax evasion, among other crimes, as a predicate crime to money laundering.
The government also said the proposal aims to improve the ability of AMLC to safeguard the financial system from money-laundering activities.
This is by authorizing the AMLC to issue subpoenas, by allowing the council, instead of the Court of Appeals, to issue ex parte freeze orders with respect to certain unlawful activities, and by adding unlawful activities that are exempted from the requirement of a court order before a bank inquiry may be conducted.
The proposed bill also increases the monetary penalty for administrative sanctions.
“The Philippine banking and financial system remains stable and strong. To respond to emergent risks and challenges, we are proposing a thorough update of the Anti-Money Laundering Act to further strengthen our regulatory institutions in safeguarding a robust financial system,” BSP Governor Amando Tetangco Jr. said.
Also among the amendments include the designation of the BSP as the supervising authority over foreign-exchange dealers, money changers, and remittance and money-transfer businesses for purposes of the Amla.
The DOF also proposed to amend RA 1405, or the bank-secrecy law, and RA 6426, otherwise known as the Foreign Currency Deposit Act of the Philippines, to lift restrictions on bank secrecy of peso deposits and foreign currency deposits for tax purposes.
“We are one of only three countries in the entire world where our tax administration cannot access bank transactions for tax-evasion purposes. We are one of only two countries in the entire world where tax evasion is not a predicate crime to money laundering,” Finance Secretary Cesar V. Purisima said.
Purisima noted that, while the tax gap has narrowed since 2009, the country still has a long way to go in plugging the 4 percent of GDP lost to tax evasion.
“It’s high time we keep up with international standards and pierce the veil the unscrupulous few have conveniently hidden behind,” the finance secretary said.