BAP worried over NG’s ‘slow action’ vs money laundering

The Bankers Association of the Philippines (BAP) has expressed concern over what it described as a slow action being taken by the National Government to mitigate threats of international sanctions by the Financial Advisory Task Force (FATF), which will be holding its plenary session next month.

The FATF was formed in 1989 by the powerful Group of Seven (G-7) to serve as the principal international agency that sets standards on anti-money laundering efforts.

BAP president Cesar Virata warned that if the Philippine government does not have "an acceptable law" by Feb. 23, sanctions may be imposed on the country resulting in "tremendous delays" in international financial and trade transactions.

"We are concerned that the immediate effect will be on our overseas Filipino workers (OFWs)," Virata said. "There are already moves abroad by banks and supervisory authorities on the continued examinations of remittances."

Once the Philippines is sanctioned, all FATF, member nations will implement stringent measures on all transactions going to and emanating from the country. The processing time of simple money transfers, for example, could reach days versus clearances by banks that could only take hours.

"Trade transactions will be subject to tedious scrutiny on the identity for example on complete identity of both importer and exporter. The transaction must be defended as a legitimate trade and not a front for somebody," he said. "Philippine firms and OFWs must explain and prove that remittances or payments abroad came from legitimate sources, and that will also prove true for the imports as well as exports."

Recently, sanctions had been applied to Ukraine and Haiti resulting in tedious, expensive and uneconomical delays in all activities involving member states of the Group of Seven, which includes Europe, Japan, and the United States.

Banks abroad will refuse to deal with a sanctioned country because it will take them so much time to complete a transaction or at the least make it uneconomical. "Sanctions have serious implications on the Philippine economy."

Late last year, the Asia/Pacific Group on Money Laundering (APG) stood pat on its recommendation that the Philippine government either repeal the Bank Secrecy Law or make amendments. The APG is the regional body of the Financial Advisory Task Force (FATF).

It later scaled down its position to mere implementation of certain amendments such as allowing the Anti-Money Laundering Committee (Amlac) to get around provisions protecting the bank accounts from investigation.