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COMMENTARY: Wading one's way through anti-money laundering


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It is not easy wading one's way through the money laundering law in the Philippines because it is not one law, but three: R.A. 9160, R.A. 9194 that amended the original Anti-Money Laundering Act, and finally, R.A. 10365.
 
The crime is rather curiously called "money-laundering" because proceeds from criminal activity such as kidnapping for ransom, graft and corrupt practices, etc. are "laundered" through institutions such as banks to give them the cover of legitimacy.
 
Here is a simple example: If a kidnapper receives ransom money from the parents of his victim in the amount of one million pesos, he would be stupid to keep the money because that would increase the chance of the dastardly act of kidnapping another being traced directly to him.
 
He may ask a sister to open a bank account in which she deposits one half of the ransom money, and then asks his brother to buy shares of stock with the other half.  As deposits and purchases of corporate shares,  the ransom money now has perfectly legal appearance.  Money has been laundered.
 
What is a freeze order?  

It is one that the Anti-Money-Laundering Council applies for "ex parte" -- which literally means "from its side" but in actuality means that the Court of Appeals, that has jurisdiction to issue the freeze order, need not entertain rebuttal, opposition or objection on the part of the assets' owner.
 
The freeze order is meant to prevent the suspected person from dissipating the assets -- selling, transferring, alienating or concealing them.  This is the reason for the confidentiality requirements in the law.  

Banks, stock brokers and investment houses are characterized by the law as "covered institutions" -- which means that it is these that are obligated to report to the Anti-Money-Laundering Council.
 
If someone therefore goes to his bank -- even a bank of which he is a regular customer -- and makes a deposit in excess of PHP 500,000 in ONE BANKING DAY, the transaction is "covered" -- not criminal, not anomalous, not forbidden, merely "covered", meaning, that the bank must report it.
 
On the other hand, if a tricycle driver with no other known source of income purchases shares of San Miguel in the amount of PHP 300,000.00, such a transaction would be "suspicious" because of the disproportion between the trike-driver's income and the transaction he enters into.
 
In both cases, the covered institutions must report, and AMLC must inquire.  If the covered institutions precipitously disclose the report, the persons who are really engaged in the crime of money-laundering will be forewarned, and the purpose of the law frustrated, which is why the law forbids any disclosure of the report, and any communication to and by the media.
 
Under the latest version of the law, the Court of Appeals may issue a freeze order that has currency for six months, within which time the AMLC must bring the appropriate action against the assets' owner or owners.  

While money-laundering is itself a crime, the offenses committed by which the amount was amassed are likewise crimes: such as bribery, kidnapping, graft.  The assets' owner therefore faces two criminal charges in the very least: money-laundering and what may loosely be called the "predicate" offense.
 
Is the issuance of a freeze order by the Court of Appeals covered by secrecy or confidentiality?

Really, there is nothing in the different versions of the law that requires that.  While the latest version prohibits the disclosure of "any other information in relation thereto", it is quite clear that the prohibition applies to "covered institutions", their officers and employees, and the all-encompassing "any other information" refers to information in respect to the report of the covered or suspicious transaction.
 
It is a complicated law, because it is one we were not free to craft ourselves.  We had to respond to demands of the international community that was starting to be very worried that our laxity was making us a haven for money launderers!

Fr. Ranhilio Callangan Aquino is the dean of San Beda's Graduate School of Law.

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