THE Financial Action Task Force (FATF), an international organization based in Paris, has a worldwide responsibility to monitor the control of questionable money movements. This means its remit is to counter money laundering and terrorist financing.
The FATF divides the financial environment into three categories. The most suspect countries are placed on the black list. Less suspect, but still not deemed to be squeaky clean, countries are put on the gray list and countries where the financial environment is sound and where anti-money laundering is effective on the white list.
The Philippines was put on the black list in June 2000 but was ‘promoted’ in February 2005 after the passage of Republic Act (RA) 9180 – the Anti-Money laundering Act (AMLA) in 2001. This was underpinned by the creation of the Anti-Money Laundering Council (AMLC) in 2003.
Since then, the Philippines has fluctuated in and out of the gray list but has been ‘gray’ since June 2021. At the time, Benjamin Diokno, Governor of Bangko Sentral Ng Pilipinas (BSP) expressed confidence that we would be of out of the gray list by January 2023. Unfortunately, this has not happened and current BSP Governor Felipe Medalla now has the responsibility to endeavor to ensure that the Philippines is out of the gray list by January 2024. He needs to prove that the Philippines can enforce measures to counter money laundering and terrorist financing. Success in this task will encourage foreign direct investments which are vital to our economic growth.
In a recent meeting between Medalla and Justice Secretary Jesus Crispin Remulla, it was agreed that we need to be more diligent in obtaining successful convictions against malpractice.
A year or so ago there was a notorious case involving Wirecard AG, a German organization which was damaged by a US $2 billion accounting fraud. Much of the nefarious activity took place in the Philippines. The National Bureau of Investigation (NBI) did sterling work to gather information on movements of the alleged perpetrators. Regrettably, it is not clear that a successful prosecution ensued.
Domestically, a year ago, BDO’s systems were hacked and over 700 accounts suffered unauthorized withdrawals. BDO’s opinion, not challenged by BSP, was that if the customers got their money back from BDO, then everything was satisfactory.
I disagree. We also need to prove that the frauds cannot happen again.
BSP should, if it does not have the authority already, establish with BDO as to how the defalcations occurred. It seemed, however, that it was satisfied with BDO’s explanation that all the stolen money was returned.
If we want to be ‘promoted’ out of the gray list, then we need to conduct successful prosecutions of the alleged perpetrators.
Does BSP need stronger powers to investigate malpractices?
I believe so./PN
