Philippine congress amends dirty-money law

PUBLISHED : Friday, 14 February, 2003, 12:00am
UPDATED : Friday, 14 February, 2003, 12:00am

Lawmakers yesterday approved changes to the Philippines' law against money laundering - changes many of them conceded fell short of the demands of an international financial watchdog.

Senate president Franklin Drilon said that of the four amendments required by the Paris-based Financial Action Task Force (FATF) to remove the Philippines from its list of non-co-operative nations, Congress agreed to only 'two and a half'.

It agreed to lower the threshold for the automatic reporting of bank deposits and accounts to 500,000 pesos (HK$72,300) from four million pesos previously.

Congress also adopted the FATF definition of what constituted 'suspicious transactions'. But it rejected the taskforce's demand to allow regulators to check suspicious transactions that preceded the law's passage last year.

Congress granted local regulators the power to examine suspicious accounts without a court order, but only for suspected transnational crimes such as terrorism coupled with kidnapping, murder, arson or hijacking, and suspected drug-related activities.

After 12 hours of acrimonious debate, the lawmakers resolved that regulators must secure a court order before they could examine banking transactions involving domestic crimes such as graft and corruption.

Congressman Francis Escudero said ruefully that had the decision on domestic investigations gone the other way, it could have aided greatly the fight against corrupt public officials.

Senate banking panel chairman Ramon Magsaysay conceded that the law was deficient.

'If only some of us were more co-operative and more open,' he said. Both those who had voted for the FATF-mandated changes and those who had opposed them said they had cast their votes 'in the national interest'.

The taskforce's demands, coupled with a threat of sanctions, had struck a sensitive chord. Opposition Senator Edgardo Angara said the demands were a form of blackmail, while pro-administration Senator Joker Arroyo said such powers could become a potent tool for a Philippine president against his political enemies.

Central bank governor Rafael Buenaventura, whom legislators had accused of being an FATF mouthpiece, said: 'I think we will go back to them and say this is the law, this is what you required, this is what we did and we feel it is effective enough.'

He said the taskforce had three courses of action.

First, it could accept the argument that this was the best the country could do 'because of the culture, the environment'. It could then send a team to the Philippines and if this team saw that the implementation of the law was effective despite its limitations, it could give its seal of approval.

Second, the FATF could reject the changes and impose sanctions. Third, the watchdog could reject the changes and give the Philippines a deadline for new amendments. Meanwhile, sanctions could be imposed, Mr Buenaventura said.

Finance Secretary Jose Camacho flew to Paris yesterday to argue for the country's delisting.

Aside from the Philippines, Indonesia and Myanmar are the only other Southeast Asian countries on the taskforce's blacklist.