SEN. Grace Poe, warning against international backlash, pressed lawmakers on Wednesday to frontload passage of remedial legislation imposing tougher sanctions against money-laundering activities, or risk landing on the international Financial Action Task Force “grey list.”
“Before us is an important measure that requires our immediate attention,” Poe pleaded, reminding senators that “we are implored to immediately act on it by the Asia Pacific Group on Money Laundering, as a form of national economic emergency, due to the very serious economic costs arising from noncompliance.”
In Senate plenary deliberations, Poe pointed out that the remedial legislation seeks to further amend the Anti-Money Laundering Act of 2001 following the “key findings of the mutual evaluation report or MER which evaluated our compliance with the 40 recommendations of the Financial Action Task Force (FATF) on Money Laundering.”
She warned that failure to act on the findings would land the Philippines on a so-called “grey list” of noncompliant countries.
“If we fail to act now, the FATF ICRG Asia Pacific Joint Group or AP-JG will place the Philippines on the so-called ‘grey list’, along with countries like Albania, Pakistan, Panama, Syria, Uganda and Zimbabwe, to name just a few,” said Poe.
She added that “being on this list is a very strong signal to market participants and regulators globally,” noting that it has “implications which we must avoid as much as we can, especially during the time of a global pandemic.”
For instance, Poe warned that other member-countries and the whole of the European Union will impose an “enhanced due diligence” or EDD on Filipino nationals and businesses that transact within their channels, adding that “this will result in additional cost, paperwork, higher interest rates and processing fees” for Filipinos doing business within the jurisdiction of the European Union.
The EDD will also affect numerous overseas Filipino workers, as it would translate to a higher cost of remittance from them. “Hard-earned money that could have been used to spend for their families will just go to higher remittance fees,” Poe said, in Filipino.
To make matters worse, the Philippines will incur a “reputational risk” that would certainly result in reduced investor and lender confidence, Poe said, adding: “We can only imagine the domino effect that this would trigger to all of our local industries.”
She added: “All of these things will be a major setback in our efforts to achieve an ‘A’ credit rating before 2022. This is a scenario that we have to steer away from.”
Poe then asked to be allowed to briefly explain to the body the salient features of the measure which, she said, were expertly reviewed and improved with the help of all stakeholders, and fellow Senators Frank Drilon, Imee Marcos, Cynthia Villar, Sherwin Gatchalian and Senate President Pro Tempore Ralph Recto, who participated in the committee hearing.
First, she said, the mutual evaluation report seeks to “include real-estate developers and brokers as covered persons because of the fact that real-estate activities are widely used as a front for money laundering and terrorism financing all over the world.”
Thus, Poe said, the panel members included real-estate developers and brokers on the list of covered persons when they engage in a single cash transaction in excess of P5 million or its equivalent in any other currency. “To clarify the coverage of Internet-based casinos, we also expressly specified the coverage of offshore gaming operators and their service providers,” she added.
“Second, we included the commission of tax crimes and violation of the Strategic Trade Management Act, which relates to the proliferation of weapons of mass destruction and its financing, as predicate offenses to money laundering,” said Poe.
She added: “Third, we improved the functions of the AMLC by (1) enhancing its investigative powers through express powers of deputization, power to apply for search warrant, and power to obtain information on ultimate beneficial ownership; (2) authorizing it to implement targeted financial sanctions on proliferation financing; (3) authorizing it to preserve, manage or dispose assets subject of asset preservation order and judgement forfeiture; and (4) prohibiting the issuance of injunctive relief against freeze orders and forfeiture proceedings under its jurisdiction.”
She further clarified that for purposes of providing clarity as to the scope and applicability, this measure includes a definition of the terms “proliferation financing”, “offshore gaming operator”, “service providers”, “real estate broker”, “real estate developer”, and “targeted financial sanctions”.
Poe particularly thanked Drilon and his team “for generous contributions during the drafting of this bill. His invaluable assistance is truly instrumental in the realization of our collective goal to make the Philippines a true global partner against money laundering.”
Image credits: Roy Domingo