Muling

We do not have them here although we pretty much know what mules are. They are relatively untrainable animals, precious as beasts of burden.

We know what drug mules are. The term is used to refer to individuals used to transport illegal drugs from one place to the next. Some of them are unaware they are participating in a criminal act. Such unawareness, however, cannot be used as a mitigating factor when they are caught and charged.

Not many outside the arcane world of finance are unaware about “money mules.” These are persons used knowingly or unknowingly to move money from one account to another in an effort to conceal their illicit sources.

“Money mules” are one of the remaining loopholes in the global effort to fight money laundering – especially money generated by organized crime and those used to fund terrorism. The beneficial owners find persons willing or able to have money transferred to their accounts and then subsequently transferred again to a fourth party.

Recall the money originating from a Bangladeshi bank and coursed through a Filipino bank. The money was subsequently withdrawn in cash and delivered to a designated receiver. The only reason this scheme was busted was because the amount involved was staggering. The money transfer stood out like a sore thumb.

In most instances, “money mules” receive a small commission for agreeing to transfer money through their accounts. In some instances, they often do the transfer as a favor to someone else.

Previously, the only way to fight this phenomenon was the application of strict know-your-customer (KYC) procedures. This is the reason why it has become more tedious to open a new bank account the past few years. Too, there are now no more numbered accounts: those that carry no personal identity details of the account holder.

Since the passage of the Anti-Financial Account Scamming Act (AFASA), the ability of organized criminal syndicates to move money around in order to conceal their illicit sources has been further reduced. This recent piece of legislation is one of the reasons the Philippines was finally removed from the “gray list” of countries closely monitored for the possibility of money laundering.

AFASA introduced strict penalties for those who knowingly or unknowingly serve as “money mules” for concealing illicit funds. These funds include those created through financial scams, organized criminal activities and terrorism. The penalties include heavy fines and jail time for those caught transferring funds associated with fraudulent activities.

As in the case of “drug mules,” ignorance is not a mitigating factor. The law criminalized the act of “muling” itself. The banks are obliged to play a frontline role in the broad effort to curb money laundering.

When money laundering is curbed, the crimes committed to produce dirty money should also be curbed. This will help us create a safer world for all involved in financial transactions.

The law contains an educational component. Customers of financial institutions will be made more aware of the penalties awaiting those who participate in concealing dirty money. They will be warned against allowing money associated with illicit activities to pass through their accounts. The educational effort to be undertaken by financial institutions should create a more aware customer base with less people prone to unwitting participation in money laundering.

AFASA prescribes penalties for “money muling” that are at par with global standards. This ensures that our country will no longer be a weak link in the strong chain built to combat laundering dirty money.

In the past, we had to be constantly apologetic for having weak legislation that made our country a vulnerable jurisdiction attracting organized crime, financial scamming and money laundering. With this shining new piece of legislation, we join the ranks of all the mature economies joined in a global effort to make the world safe for customers of financial services.

This is, for us, a strong step forward.

Sad

Last Tuesday was a sad day for the nation.

The case brought before the International Criminal Court (ICC) against former president Rodrigo Duterte invited global attention to the weaknesses of our institutions. If the drug war exceeded its bounds, it was because our institutions failed to check wholesale abuse and impunity.

When the former president was arrested, it was a moment of high drama for nearly every citizen. Yet, until very late Tuesday night, none of our senior officials made an appearance to explain the event and reassure everyone. It did seem, through the ongoing hours of that day, that our most senior officials have abdicated.

The extent to which the Philippine government should have intervened to protect the rights of one of its citizens will be the subject of long and complex debate among our legal luminaries for many days.

The decision to take a former president into custody without first explaining the legal basis for such act was sloppy procedure, to say the least. The haste to put Rodrigo Duterte on a plane and dump him on the ICC at the soonest was not a good look. It suggests a government unsure of its step and unduly fearful of what the action might imply. Sara Duterte described the hasty process of deportation as “state kidnapping.”

On Tuesday, the margins on our treasury bonds widened, making it more expensive for our government to service its debt. The stock market fell hard due to fears to domestic tumult.

We were punishing ourselves.