Republic Act (RA) 9160, as amended, otherwise known as the Anti-Money Laundering Act (Amla) was signed into law on September 29, 2001. The same was first amended in 2003, through RA 9194, which, among others, lowered the amount of covered transactions, defined suspicious transactions and provided additional functions to the Amla.
RA 10365 further amended the Amla in 2012— expanding the list of institutions covered by the said law, as well as the list of unlawful activities or predicate offenses, just to name a few. And the most recent amendment made to Amla—to further enforce the country’s fight against money laundering and to make our country fully complaint with the standards provided under the Financial Action Task Force (FATF) Recommendations—is RA 10972, which includes casinos as covered institution.
However, despite several amendments made to strengthen the Amla, there are some violations that are left uncovered. Hence, Resolution 468 was filed in the Senate in August this year by Sens. Vicente C. Sotto III and Panfilo M. Lacson Sr. directing the Senate Committee on Banks, Financial Institutions and Currencies to conduct an inquiry, in aid of legislation, into the possible violation of RA 9160 (the Amla) by certain “covered institutions.”
This Senate Inquiry is based on reports that the former Chairman of the Commission on Elections (Comelec) Andres D. Bautista, has 35 separate accounts with Luzon Development Bank (LDB)—30 accounts at the Fort Bonifacio, Taguig City, branches and five accounts at the Makati City branch—totaling to P329 million. The Senate inquiry, likewise, revealed a recent report by the Presidential Commission on Good Government (PCGG), which discovered that 316 accounts of sequestered and/or surrendered companies were transferred by the then-PCCG Bautista from government banks to LDB.
The Comelec chairman, as an individual who holds a prominent public position in the Philippines, is considered as a Politically Exposed Person (PEP), as defined in the Amla, to wit:
PEP refers to an individual who is or has been entrusted with prominent public position in: (a) the Philippines with substantial authority over policy, operations or the use or allocation of government-owned resources; (b) a foreign state; or (c) an international organization.
The term PEP shall include immediate family members, close relationships and associates that are reputedly known to have:
- Joint beneficial ownership of a legal entity or legal arrangement with the main and/or principal PEP; or
- Sole beneficial ownership of a legal entity or legal arrangement that is known to exist for the benefit of the main and/or principal PEP.
The Senate Committee noted that LDB, as a covered institution under the Amla, should have taken reasonable measures to determine whether its customer is a PEP.
The Bangko Sentral ng Pilipinas (BSP) Circular 950, series of 2017, provides that covered institutions shall specify criteria and description of the types of customers that are likely to pose a low, normal or high money-laundering and/or terrorist financing risk to their operations as well as the standards in applying reduced, average and enhanced due diligence. The same BSP circular implies that the enhanced due diligence shall be applied by the covered institutions to those individual customers who are considered as PEP. Moreover, whenever enhanced due diligence is applied, the covered institution shall, in addition to profiling of customers and monitoring of their transactions, require additional information and/or documents from the customer; conduct validation
procedures; obtain senior management approval for establishing business relationship; conduct enhanced ongoing monitoring of the business relationship; require the first payment to be carried out through an account in the customer’s name with a bank subject to similar customer due diligence standards, where applicable; and perform such other measures as the covered person may deem reasonable or necessary.
This Senate Committee chaired by Sen. Francis G. Escudero with Sen. Grace Poe as cochairman, has, so far, conducted two hearings.
In both hearings, Bautista was a “no-show.” Predictably, LDB hid under the mantle of the bank-secrecy laws and refused to answer probing questions of the Senate committee. The committee observed that there were enough “red flags” for the BSP to require LDB to explain the multiple accounts opened by Bautista and the enormous amounts involved, albeit broken down into amounts less than the threshold P500,000 so as not to be under the radar of the Amla. And yet, the BSP and the Amla appear not to be too concerned about these glaring red flags. A third Senate hearing is scheduled for January next year. Will Bautista again be a no-show? Will LDB again claim protection under the bank-secrecy laws?
Hopefully, next year will be a better year—and the bad guys finally get to account for their bad deeds.
But for now, let’s just hope Santa doesn’t reward them with more “gifts.”