Despite President Arroyo’s staunch support to the US-led global war on terror, Washington will impose sanctions on the Philippines if Manila does not amend its anti-money laundering law to meet international standards, US Ambassador Francis Ricciardone told reporters yesterday.
Ricciardone met yesterday with Finance Secretary Jose Isidro Camacho and Lilia Bautista, chief of the Securities and Exchange Commission, to brief them on the impact of the counter-measures imposed by the Paris-based Financial Action Task Force, a global watchdog against money laundering.
Philippine officials, including Mrs. Arroyo, were counting on the country’s close ties with the US, the most powerful member of the FATF, to move Washington to help soften the sanctions.
Ricciardone told reporters that Washington has been acting as a mediator between Manila and the FATF but only to make sure that both sides "understand each other."
"The US is not trying to persuade the FATF to water down its standards for the Philippines," Ricciardone said. "The legislators may want to lower their standards but I am not sure that is what the country wants."
What Manila can count on, he said, is US assistance in adjusting its anti-money laundering regime to comply with the FATF. "We will lend our expertise in getting the right legislation. We can help (Manila) meet the costs, the training and the software," he said.
The Bankers Association of the Philippines earlier said the government cannot rely on support from Washington, because of its global war against terrorism, which included efforts to dismantle terrorists’ financial network.
"We do have special relations with the US but remember, the US also has special relations with a lot of other countries," BAP executive director Leonilo Coronel earlier said.
During their meeting, Ricciardone presented Camacho and Bautista a list of possible sanctions under a US law, known as the USA Patriot Act, passed after the Sept. 11 attacks to cut off funds used by terrorists.
The law authorizes the US Treasury Department to impose any or all of five "special measures" on countries whose anti-money laundering laws were considered lax.
Camacho said it was not clear which of the measures would be imposed on the Philippines. That would depend on what the FATF may actually call for and how the US would react to it, he said.
However, Ricciardone passed on a note on US counter-measures that indicated that four of the measures might be imposed on the Philippines that will require US financial institutions to screen transactions with the Philippines.
The first measure would require keeping records and filing reports on particular transactions, including identities of participants in the transactions and the beneficiaries of funds involved.
The second would require institutions to obtain information on the owner who maintains an account in the US either personally or by proxy.
The third and fourth measures — which Camacho said were the most stringent — would require the identities and other pertinent information about customers permitted to use a bank’s "payable through" account.
The fourth measure would require US banks to identify and obtain information on customers allowed to use or whose transactions were routed through a Philippine bank’s correspondent account.
Camacho said the fifth special measure totally prohibits US financial institutions from "opening or maintaining a correspondent account or a payable-through account in the US for or on behalf of a foreign financial institution" if the account would involve the Philippines.
Washington imposed all five measures against Nauru and the first four on the former Soviet republic of Ukraine. Less than two months after imposing sanctions on Ukraine, they were lifted when the country passed legislation that met the FATF’s standards.
Faced with possibility of being fenced out from the international financial system, Manila is planning to ask the US to intervene and convince the FATF to hold off the sanctions.
The FATF’s decision last Friday to impose counter-measures was immediately followed by a flurry of unofficial and informal negotiations between the Arroyo administration and key lawmakers as the government attempted to salvage the situation before the FATF sanctions take effect on March 15.
The Philippines has until then to recall the amendments to the anti-money laundering law to make it conform with international standards.
The sanctions were imposed when Congress failed to pass the necessary amendments to the law, which the FATF said was insufficient to stem the flow of dirty money.
A Malacañang source earlier said lawmakers did not take the FATF seriously, thinking that it did not have the clout to actually influence international financial transactions.