No dirty money from OFWs, yet – gov’t watchdog

by JEREMAIAH M. OPINIANO
www.ofwjournalism.net


MANILA (OFW Journalism Consortium)–DIRTY money passing through or flowing into the country as monitored by the Philippine anti-money laundering unit hasn’t involved overseas Filipino workers, yet, its executive director said.

Of the 18,269 suspicious transactions the Anti-Money Laundering Council flagged for the past six years ending 2007, none of these are linked to formal and informal flows of earnings by OFWs, data from AMLC revealed.

“So far, Filipino remitters have been compliant” to money laundering regulations, AMLC executive director Vicente Aquino said.

Aquino spoke to the OFW Journalism Consortium before a US court sentenced a man who admitted transferring approximately US$15 million to bank accounts owned or controlled by co-conspirators in the Philippines. The money was part of a $20-million scheme to defraud the Export-Import Bank of the United States.

The statement dated March 1 issued by Assistant Attorney General Alice S. Fisher of the Criminal Division and US Attorney Jeffrey A. Taylor of the District of Columbia didn’t expound on how that much amount of money was transferred to Philippine bank accounts.

With remittances pumping Philippine consumption, monitoring its flow becomes highly important as a credible economic instrument.

Remittance flows to the Philippines is the world’s third largest, according to recent World Bank ranking.

If the AMLC finds something irregular, it flags a Suspicious Transaction Report (STR).

However, none of those STRs covering overseas Filipinos’ remittances have been flagged, Aquino added.

“They have no derogatory record” with the AMLC, Aquino said.

STRs in banks and non-bank financial institutions number to 15,469, AMLC data showed. Government-sourced STRs number to 2,679, insurance STRs number to 91, and STRs in securities number to 30.

All these STRs cover a total of nearly 104 million transactions, AMLC data showed.

Aquino said the AMLC had frozen a total of nearly P406 million in funds from banks and insurance proceeds. Some P272 million of the total is in Philippine peso. Meanwhile, the peso equivalents of those for other currencies are P125.48 million for US dollar transactions, P1.6 million for Japanese Yen transactions, P7.8 million for Hong Kong dollar transactions, and P60,596 for Euro transactions.


Vigilance

AQUINO says despite the spotless record of OFWs in these transactions, the AMLC remains monitoring remittances.

Such is not an easy task since banks no longer hold the monopoly of platform for money transfer.

The information and communication technology boom has spawned fast cash flow via, for example, mobile phones and the Internet.

The World Bank’s Information for Development (infoDev) program, nonetheless, believes such technology can combat dirty money.

InfoDev said in a paper that the Philippines’ mobile phone remittance technologies “even help reduce fraud, money laundering and criminal acts…because the cash assets are no longer being carried around in person”.

Aquino said the reason for the spotless money laundering record of overseas Filipinos is because of a threshold whenever a migrant remits through formal and informal or non-banking channels.

That threshold is for a one-time remittance activity, as Aquino observes migrant remitters send amounts way below the US$10,000 threshold (say US$1,000 or US$2,000) monthly.

The know-your-customer (KYC) requirement is also strictly followed in remittance centers and banks overseas and in the Philippines. Money senders are required to verify their identity as well as the identity of the recipients.

Meanwhile, the Interpol (the world’s largest international police organization), in a study of “ethnic banking systems” of 31 countries in Asia, cited it found neither direct nor indirect links between overseas workers’ remittances and money laundering.

This is despite the study having discovered direct links between these banking systems and money flows from unlawful activities.

In the East Asian region, there are “unregulated remittance centers” in Hong Kong-China, Japan, and Korea that serve nationals such as Filipinos, the Interpol study said.

Ethnic banking systems among countries in East Asia “report interconnectedness with the currencies and peoples of the Asian-oriental region,” Interpol wrote.

The study, written by Lisa M. Carroll and done through a survey of Interpol’s per-country counterparts, also wrote that 13 countries’ alternative remittance systems, including the Philippines’, “function as a money laundering tool”.

But items on the Philippines in Interpol’s report show that the laundered money comes from the drug trade, profits from illegal gambling, proceeds from human trafficking, alien smuggling and ransom.


Baseball

THE Philippines, which was once part of a list of non-cooperating countries and territories, has been in an “anti-money laundering regime” Aquino claims.

He likens this regime to a “baseball field of dreams” where anti-money laundering enforcers and prosecutors are ready to spot laundered money flows and operators.

We have all the bases covered, he adds.

On the first base are the AMLC’s special anti-money laundering investigators, while special prosecutors and state from the Department of Justice cover the second base through prosecuting money laundering cases and mutual legal assistance and extradition matters related to money laundering and terrorist financing.

The third base is also covered, Aquino explains, by AML solicitors under the Office of the Solicitor General who help the AMLC in forfeiture and other remedial proceedings. And the home base is manned by special AML courts. Aquino’s office is in the pitcher’s plate, “manning such (Philippine) money laundering structure”.

For received information on money laundering flows from overseas countries, Aquino says the Philippines is part of a worldwide network of 107 FIUs that have access to each others’ financial intelligence information.

In AMLC’s six-year report, while STRs commonly cover cases such as drug trafficking and illegal gambling, none were linked to human trafficking or human smuggling, of which Philippine victims involve transient women and children.

Since the Philippines’ inclusion in the FATF list of NCCTs in 2002, international groups have suspected that remittances from overseas Filipinos are mixed up in the flows of laundered money, and even on terrorist financing.

Currently, the STRs that the AMLC flagged were linked to violations of the Securities Regulation Code, drug trafficking, swindling/estafa/fraud, kidnap for ransom, robbery, local illegal numbers games such as jueteng and masiao, and graft and corruption cases.

The Philippines was de-listed from FATF’s NCCT list on February 2005
But “we will be always on guard,” Aquino says, pointing to a Bearskin hat that British Army guards wear.

That hat, he explains, was a gift after helping a British financial intelligence team crack a case some years ago.

Hopefully, that hat can keep out the heat involved in tracking dirty money.


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