Manila toughens anti-laundering law

Staff and wire reports

MANILA, PHILIPPINES -- The Philippines has revised a key anti-money laundering law in a bid to appease a taskforce that slaps sanctions on countries for dirty money.

The Philippines has come up with a set of rules and regulations so that it can be taken off a 19-nation blacklist of 'non-cooperative countries' before the end of the year.

Speaking at a signing ceremony on Wednesday, central bank governor Rafael Buenaventura said the country had adequately addressed and clarified concerns raised by the Financial Action Task Force (FATF).

The FATF, a global agency that monitors the issue, is an independent offshoot of the 29-member Organization for Economic Co-operation and Development.

"Right now we feel that the implementing rules and regulations are satisfactory," said Buenaventura, who is also chairman of the newly formed Anti-Money Laundering Council (AMLC).

The Philippines passed an anti-money laundering law last year, one day before the September 30 FATF deadline for imposing sanctions.

Contentious provisions

But the Paris-based body decided to keep the Philippines on its list after it raised contentious provisions in its anti-money laundering law.

The group has prepared sanctions against the Philippines, but has not acted "for the time being."

It sent a letter to President Gloria Macapagal Arroyo's administration, citing "important deficiencies" in the Philippines law that it claims need addressing.

For one, the law only mandated banks to report suspicious transactions in excess of four million pesos ($78,740).

The taskforce also questioned the prospective nature of the law that inhibits the AMLC's investigative powers, and the country's bank secrecy law.

The task force also cited the limited authority of the central bank to determine the owners of non-checking numbered accounts.

But Buenaventura assured the new rules instructs banks to report any suspicious transactions, regardless of the amount involved as long as there is reasonable belief it involved money-laundering activity.

"Money laundering is money laundering regardless of the amount," he said.

And to prove that it is serious in its bid to curb money laundering, Buenaventura said the AMLC has frozen six accounts from parties suspected of having breached the new law.

He said five of the cases under investigation were engaged in 'boiler room' operations, which involved Filipinos and people from overseas.

Boiler room refers to a clandestine operation of selling non-existent securities to overseas customers by phone.

Blacklist removal uncertain

Despite the new rules, some legislators and officials have expressed uncertainty about whether the Philippines would be taken off the list by December, saying the process would be long and arduous.

The process of delisting starts with the FATF Asia-Pacific group of evaluating the new rules. The Philippines would be required to submit a full implementation plan.

If the plan is deemed satisfactory, the regional unit of the FATF would then recommend that an evaluation team be sent to the country.

The team would then assess if the law is being implemented properly. Only then would the team make recommendation on whether the Philippines should be removed.