Loopholes in antimoney laundering law bared

MANILA, Philippines — Bureau of Customs (BOC) chief Rey Leonardo Guerrero admitted to lawmakers on Monday that there was an apparent loophole in the country’s money-laundering and banking laws that tied the hands of authorities in curbing the inflow of foreign dirty money.

“Yes, Mr. Chair, I agree there is a seeming loophole” in the law, Guerrero said in response to the observation of Quirino Rep. Junie Cua, chair of the House banks committee, about the existence of gaps in standard protocols for the entry of bulk cash through Philippine airports.

The exchange occurred during the motu proprio investigation launched by Cua’s panel on the entry of at least $370 million (P18.7 billion) in foreign dirty money brought in by two suspected criminal syndicates from last year up to January.

Cua had noted that there was no mechanism for validation on the part of the BOC, as well as the Anti-Money Laundering Council (AMLC) and the Bangko Sentral ng Pilipinas (BSP), to verify the truthfulness of travelers’ customs declaration forms for amounts bigger than the $10,000 threshold.

While the carrier of the foreign currency is supposed to fill out BSP forms indicating the source of the fund and its purpose, “he or she may not be the owner of the money,” the congressman said.

No verification

“The point here we want to establish is, if we just rely hook, line and sinker on what is declared here, and if the amounts are so huge, it looks like this form is a form that just triggers further investigation, and it does not in any way compel a process of verification whether the declaration as to source or as to purpose is truthful or not,” he said.

“There is no such mechanism that is put in place so government will be able to find out where this money is coming from. It could be money coming from unlawful sources or the proceeds of unlawful activities,” Cua said.

“I think this is the loophole, unless we have a way of verifying the source or the purpose of the money,” he said.

“I think this is why we are becoming a haven” of moneylaundering, Cua lamented.

Guerrero agreed to Cua’s observation, adding that his agency was in constant coordination with the AMLC “as part of our own initiative” and in the absence of any specific interagency body to curb the inflow of foreign dirty money.

AMLC Executive Director Mel Georgie Racela said the systems in place were set up in such a way that burden of proving the unlawfulness of bulk cash entry fell on the authorities and not on the persons carrying the money.

He said the AMLC could only begin an investigation when specific transactions triggered suspicions of possible illegal activity.

Tracing the fundsRacela said that happened with the individuals from the “Rodriguez Group” and the “Chinese Group” who were apprehended for carrying large amounts of foreign currency, prompting the AMLC to first check with the “terror list” and then request for “derogatory information” from the countries where they came from.

“The result was negative, and we still pursued the other aspects of tracing funds, and that is request the BSP to examine the money service business involved in the movements of cash,” he said. INQ