RP faces sanctions for not doing enough against money laundering

The Philippines faces sanctions from the world’s industrialized economies by the second half of this year due to its "lack of progress" in combating money laundering.

This was among the main points of the testimony of a ranking US Department of Treasury official before a hearing of a government affairs sub-committee of the US Senate, according to a document provided by the US Embassy in Manila.

US Treasury department official Joseph Myers testified before a probe body of the US Senate governmental affairs committee that the Philippines, along with three other nations, have shown little progress in combating money laundering.

Myers said finance ministers of the G-7 group of seven major industrialized nations have agreed in Palermo last month to support appropriate "countermeasures" that are to be determined in June.

Myers, however, did not specify in his testimony what countermeasures would be considered by G-7 nations.

But Myers’ testimony appears to point to unspecified changes in the relationship of Philippine banks with banks and financial institutions in "New York money center banks."

Aside from the Philippines, Myers identified Russia, Lebanon and Nauru as among the nations that have shown little progress in fighting money laundering.

The US is among the leaders of the Paris-based Financial Action Task Force (FATF) an multilateral international effort to curb financial abuses, such as money laundering.

The FATF in July last year listed the Philippines as among the 15 top money-laundering centers in the world.

Myers said seven of these 15 "non-cooperative countries and territories" (NCCTs) have made substantial progress in curbing money laundering.

"But some, unfortunately, have shown little progress," Myers said.

"The FATF has indicated its special concern about the relative lack of progress in the Russian Federation, Lebanon, the Philippines and Nauru."

Myers said each of these four countries has "its own particular obstacles to address, but the international community is expecting a positive response to the concerns identified."

"The FATF is planning in June to reach a decision with respect to countermeasures for those jurisdictions, identified as non-cooperative in June 2000, which have not made adequate progress.

Money laundering is the practice of "erasing" the illegal source of ill-gotten funds by depositing it in a foreign bank or enterprise before remitting the funds to make it appear as legitimate income.

Myers said both the US treasury and justice departments have tagged international correspondent banking services as "vulnerable to abuse by criminals seeking to disguise the proceeds of crime."