Council to ask Congress to junk tax evasion from laundering bill

The Capital Market Development Council has decided to ask Congress to drop tax evasion from a list of crimes covered by the proposed bill against money laundering and not to require a court order before authorities can look into suspicious bank accounts or other financial transactions.

The council is led by Finance Secretary Jose Isidro Camacho and Bangko Sentral ng Pilipinas Governor Rafael Buenaventura. Its other members are the representatives of the Insurance Commission, the Securities and Exchange Commission, the private sector, including the Bankers Association of the Philippines, the Philippine Stock Exchange, and the Financial Executives of the Philippines (Finex), the Investment Houses Association of the Philippines and the Money Market Association of the Philippines.

The council, in a meeting last Wednesday, decided that tax evasion should be dropped because only the Bureau of Internal Bureau is competent enough to establish that and also to reassure the business community that derogatory findings would not be used to build a new case against them for tax evasion.

If Congress drops this, only dirty money coming from drug traffacking, kidnapping, graft and corruption, plunder, among others, would be covered by the bill.

On the court-order requirement which is in the House version but not in the Senate’s, the council said three major points argue against this:

1. It makes bank deposit secrecy stricter than it is at present and hence would likely be rejected by the Financial Action Task Force (FATF), the international body that has given countries that have not made money laundering crime until the end of this month to do so.

At present, a bank account can be looked into under certain conditions only after the issuance of a court order. The House version would make it a two-step process because the money laundering board would first make the report and then the court order would follow.

2. Any application by the board with the courts to look into suspicious account would make the records public and hence potentially breach unnecessarily the confidentiality of the inquiry and unduly expose a depositor to public scrutiny.

The House version would require the proposed board to go to the court each time an account is flagged, and they would run into thousands.

3. The court order requirement would most likely stop inquiries in their tracks through a temporary restraining order. As a result, the board would most likely end up fighting in the courts the TROs instead of focusing on its main responsibility.