The Finance Department pushed for changes in the Anti-Money Laundering Act, after several foreign banks cut ties with money transfer operators servicing migrant Filipinos.
Finance sought the amendments in connection with the $81-million heist that used a Philippine bank and a remittance company as conduits.
Finance Secretary Cesar Purisima said amending Republic Act No. 9160, or the Amla law, was urgent to protect the remittances of migrant Filipinos. “A growing number of foreign banks have recently closed accounts of money transfer operators that service our OFWs [overseas Filipino workers]. If foreign banks continue to close down more accounts, the cost of remitting money for our OFWs can double,” Purisima said.
“Reforming Amla will send a message to foreign banks that OFW remittances should not be confused with the dirty money an unscrupulous few have coursed through the weak spots of our system. Reforming Amla will show our OFWs that we are serious about protecting their hard-earned money,” he said.
Some $81 million worth of funds deposited by Bangladesh’s central bank in the New York Federal Reserve was reportedly stolen by computer hackers and wired to a branch of Rizal Commercial Banking Corp. in February this year.
The money was reportedly converted into pesos by remittance company Philrem Service Corp., before the money found its way to several casinos.
The Finance Department said it was supporting the inclusion of casinos and real estate dealers in the list of covered institutions for transactional reporting. It also reiterated its support in relaxing Republic Act No. 1405, or the law on secrecy of bank deposits.
“The DOF has long been vocal against the highly restrictive provisions protecting money launderers and tax evaders behind the veil of bank secrecy and thus supports relaxing it under certain circumstances,” it said.
Purisima said despite the strong performance of the Philippine banking sector of the country, there were risks in the sector that should be subject to reforms.
“A resurgent economy built on good governance must be willing to constantly reform where there is room for improvement to be found. Our banking system remains strong and stable, owing to the Bangko Sentral ng Pilipinas’ even keeled hands, but we acknowledge that there are cracks in our financial institutions people of greed have used to their advantage,” Purisima said.
“We ought to strengthen the regulatory regimes that govern our money flows. We need a long-term legal remedy by way of an amendment to Amla,” he said.
The department said tax evasion was curiously left out of the Amla law, handicapping investigators and depriving the government of the legal means to go after tax evaders, and by extension, money launderers who obviously did not pay taxes for their cash inflows.
“The Philippines is only one of three countries in the entire world where tax authorities cannot access bank transactions (Switzerland and Lebanon being the other 2), and remain only 1 of only 2 countries in the world where tax evasion is not a predicate crime to money laundering,” Purisima said.
He said this unusual arrangement gave unparalleled latitude for the erosion of financial integrity.
Switzerland is set to ease their bank secrecy laws as they relate to tax matters by 2017.
Bureau of Internal Revenue commissioner Kim Jacinto-Henares said tax evaders usually hid in the shadow of bank secrecy laws.
“Far too often criminals have hidden behind bank secrecy laws. It’s time to pierce the veil, within reason and under certain circumstances. If this saga reveals anything, it is that our laws need a serious updating,” Henares said.