Dirty money

It is unfortunate that a high-profile case such as the one involving embattled Bamban Mayor Alice Guo may have reinforced the status of the Philippines as a hot bed for money laundering activities.

The Anti-Money Laundering Council (AMLC) has just ordered financial institutions and government agencies to freeze the bank accounts and assets of Guo and two other persons linked to illegal offshore gaming operations.

The AMLC’s move came after the Court of Appeals  (CA) approved the council’s petition for the issuance of the freeze order, which covers a wide range of assets, including 90 bank accounts across 14 financial institutions, several real properties and high-value personal ones, including luxury vehicles and a helicopter.

Money laundering, according to the Anti-Money Laundering Act or AMLA, is a crime committed by any person who, knowing that any money or property relates to the proceeds of any unlawful activity, either transacts, converts, moves, uses, or conceals the true nature or location or ownership of said money or property, or conspires to commit money laundering.

It can also be committed by a banking institution if it fails to report to the AMLC by a covered or suspicious transaction, which AMLA requires to be reported to the council.

According to report, dirty money went in and out of 36 bank accounts under Guo’s name between 2019 and 2020, the period during which a POGO complex was being constructed and operated on a Tarlac property of a real estate firm owned by Guo and two other incorporators who are Chinese nationals, whose bank accounts were also frozen.

The AMLA allows the AMLC to apply before the Court of Appeals, ex parte, for the freezing of any monetary instrument or property alleged to be laundered, proceeds from, or instrumentalities used in or intended for use in any unlawful activity.

The CA, after determination that probable cause exists that any monetary instrument or property is in any way related to an unlawful activity, may issue a freeze order which shall be effective immediately, and which shall not exceed six months depending upon the circumstances of the case.

If there is no case filed against a person whose account has been frozen within the period determined by the court, the freeze order shall be deemed ipso facto lifted.

According to the AMLC, the CA’s approval of AMLC’s ex parte petition for the issuance of a freeze order aims to prevent the dissipation of assets while the investigation and legal proceedings continue.

In a case decided by the Supreme Court in 2013, it said that “the primary objective of a freeze order is to temporarily preserve monetary instruments or property that are in any way related to an unlawful activity or money laundering, by preventing the owner from utilizing them during the duration of the freeze order. The relief is preemptive in character, meant to prevent the owner from disposing his property and thwarting the State’s effort in building its case and eventually filing civil forfeiture proceedings and/or prosecuting the owner.”

But in 2021, in the case of Yambao vs Republic, the SC emphasized that a freeze order cannot be issued for an indefinite time and a continued extension beyond six months violates the property owner’s right to due process.

Global dirty money watchdog Financial Action Task Force (FATF), an inter-governmental body based in Paris that sets international standards against money laundering, has a so-called “gray list” which as of October 2023, lists down 23 countries including the Philippines that are under increased monitoring.

According to a report last February, the Philippines once again failed to exit the gray list after falling short in addressing the remaining concerns on its anti-money laundering and counter-terrorist financing (AML-CFT) regime.

FATF president T Raja Kumar noted that while taking steps toward improving its AML-CFT regime, the Philippines, which entered the gray list in June 2021, has yet to address remaining strategic deficiencies that need to be addressed immediately.

Kumar said that there is a need to implement controls to mitigate anti-money laundering and terrorist financing risk that are linked to junket operations in relation to casinos as well as a need to increase investigations and prosecutions of money laundering and terrorist financing cases that are in line with the Philippines’ risks and context.

It is said that being in the gray list has tangible consequences for the country’s economy and financial system as this restricts cross-border transactions particularly remittances from overseas Filipino workers, leading to difficulties in obtaining credit and limiting inward foreign investments.

According to the AMLC, being on the gray list would publicly identify the Philippines and its inhabitants as a threat to the international financial system, as a result of which the country will face increased scrutiny from regulators and financial institutions, raising the cost of doing business with Filipinos, delaying transaction processing and impeding the country’s path to an A credit rating.

President Marcos has ordered government agencies last January to expedite efforts in addressing deliverables set by FATF within the year.

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