Still a dirty money haven

Now that the Philippines, after missing its deadline, finally managed to get out of the gray list of countries under tighter monitoring by the Financial Action Task Force or FATF, the global dirty money watchdog may want to take a look at one of the biggest financial laundromats in this country: campaign finance.

Pressure from the Paris-based anti-money laundering FATF compelled the government, among other things, to tighten supervision of casino junkets and strengthen its framework for combating terrorism financing. The complete ban on Philippine offshore gaming operations and the local POGO copycat IGL or internet gaming licensee also helped.

While Philippine officials are patting themselves on the back, several nongovernment organizations are lamenting that the exit from the gray list was achieved partly at their expense, with their assets frozen and restrictions imposed for being classified as supporters of terrorist groups.

Several of these NGOs have been linked by government security officials to the Communist Party of the Philippines and New People’s Army. The CPP and NPA are designated as terrorist organizations not only in the Philippines but also in the United States and the European Union.

The exit from the FATF gray list means the country is seen to have made significant progress in strengthening measures against money laundering and financing of terrorism.

Officials have stressed that exiting the list does not mean money laundering has been eliminated. Which is just as well, since Filipinos will laugh if told that the exit means the country is no longer a money laundering haven.

Some quarters are even hoping that the FATF will also exert pressure on the government for the passage of legislation for genuine campaign finance reforms and easing of bank secrecy laws.

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Members of all Congresses since the restoration of democracy in 1986, with their powerful self-preservation instincts, have tossed out all proposals for regulating election campaign finance and lifting of the world’s toughest bank secrecy laws.

Defanged by lawmakers and the judiciary, all that the Commission on Elections (Comelec) has managed to impose is a requirement for all candidates, win or lose, to file statements of contributions and expenditures or SOCE within 30 days after election day.

While verification of the accuracy of the financial declarations can be challenging for the understaffed Comelec, Chairman George Garcia has announced plans to upload the SOCE for public access, in hopes that interested parties particularly the candidates will be checking each other for possible lying in the statements. The Comelec can then act on complaints.

The Comelec also oversees compliance with spending limits set under the Omnibus Election Code ­– currently at P10 per voter for the races for president and vice president, P3 for other positions and P5 per voter for political parties.

Comelec officials have said the spending limits set under the Code passed in 1991 have become unrealistic and must be increased. This will be welcomed by moneyed candidates, who can then openly spend more for their campaigns without worrying about breaking the rules and facing sanctions. But raising the spending limit may be frowned upon by those with limited resources.

For candidates who are flush with cash from illegal activities, the sky’s the limit in campaign spending.

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Alice Guo is under investigation on charges of faking her Philippine citizenship to run for mayor of Bamban, Tarlac. POGOs are believed to have bankrolled her campaign for election.

Offshore gaming and the crimes linked to POGOs, such as cyberscams, kidnapping for ransom and human trafficking, aren’t the only illegal activities that have financed election campaigns in this country.

Other forms of illegal gambling such as jueteng have been laundered for successful career shifts to politics. If the jueteng lords don’t seek public office themselves, they bankroll the campaigns of candidates and even contribute heavily to the war chests of presidential bets.

Anti-crime watchdogs had previously noted that money-raising criminal activities such as kidnapping for ransom and daring robberies of banks and armored vehicles tended to spike during election season.

Apart from gambling barons, among the biggest donors to election campaigns are smugglers and drug traffickers.

When the candidate backed by such lowlifes wins, the campaign donors become untouchable, intensifying their criminal activities with impunity.

Some of the offenses are international criminal activities that transcend borders, so the FATF should be interested in the opportunities for money laundering related to such crimes.

Even groups designated as foreign terrorist organizations – the targets of the FATF focus on combating terrorism financing – engage in criminal activities to raise funds. The Abu Sayyaf, one of such organizations, has a long track record of lucrative fund-raising through ransom kidnapping and extortion. Security officials say the New People’s Army is among the biggest maintainers of marijuana farms around the country.

There’s a legally binding United Nations Convention Against Corruption, adopted by the UN General Assembly in October 2003 and which entered into force on Dec. 14, 2005. Corruption has been one of the biggest hindrances to the elimination of poverty and the achievement of UN development goals.

The global campaign against money laundering is a critical component of any battle against corruption. The FATF should be interested, for example, in the laundering of slush funds and kickbacks by politicians and other government officials worldwide.

It can set up a black or gray list of countries and territories that are money laundering havens for crooks in government and their cohorts in the private sector.

Exiting the FATF gray list is a step forward. With pressure from the FATF, perhaps Philippine lawmakers will finally be compelled to legislate campaign finance reforms and relax bank secrecy laws.