Philippines removed from FATF list of
non-cooperative countries

The Paris-based Financial Action Task Force (FATF) has removed the Philippines from its list of Non-Cooperative Countries and Territories (NCCT) following the country’s significant progress in its anti-money laundering efforts. The Philippines has been in the list since 1999 initially in connection with drug trafficking. Atty. Vicente S. Aquino, Executive Director of the Anti-Money Laundering Council Secretariat (AMLCS) reports on this development.

In June 2001, the Financial Action Task Force (FATF) placed the Philippines in its list of Non-Cooperative Countries and Territories (NCCT) for the following reasons: (1) the Philippines has no existing anti-money laundering law; (2) the Philippines has no financial intelligence unit (FIU); (3) the Philippines has very strict bank deposit secrecy law; and (4) Philippine banks and other covered institutions do not report suspicious transactions.

This explains the passage of Republic Act No. 9160, also known as the Anti-Money Laundering Act (AMLA) of 2001. The AMLA, which took effect on October 17, 2001, created the Anti-Money Laundering Council (AMLC) and vested it certain powers in line with the Philippines’ efforts to effectively combat money laundering. The AMLA was enacted to: (1) create a financial intelligence unit; (2) criminalize money laundering; (3) require banks and other covered institutions to comply with customer identification, record-keeping and reporting of covered and suspicious transactions; (4) relax strict bank deposit secrecy laws; (5) provide for freezing and forfeiture of dirty money or property; and, (6) provide for international cooperation in the transnational investigation and prosecution of money laundering offenses wherever committed. On January 19, 2004, the AMLC submitted to the Asia Pacific Review Group of the FATF the Philippines’ Anti-Money Laundering Review Group of the FATF the Philippines’ Anti-Money

 
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29 July 2014
Laundering Implementation Plan, which is the second of three (3) stages in the FATF’s NCCT delisting process. The first stage is the enactment of an anti-money laundering legislation which the Philippines had already done, and the third and final stage is the FATF’s evaluation of the Philippines’ implementation of the AMLA and its amendments.

On January 24-25, the FATF made an on-site visit to the Philippines to evaluate the AMLC’s implementation of the AMLA and compliance with the AML by the supervisory or regulatory authorities, the covered institutions, and the law enforcement and prosecutorial agencies as well as the cooperation of all other key constituencies in combating money laundering and the financing of terrorism. And finally, on February 11, 2005, the FATF removed the Philippines from its NCCT list. According to the FATF, the Philippines has an AML system that includes customer identification, suspicious transaction reporting, bank examination, and legal capacity to investigate and prosecute money laundering, as well as a developed financial intelligence unit that analyzes financial data, co-ordinates national effort, and facilitates international cooperation.

But what were really the reasons why the FATF decided to remove the Philippines from its NCCT list? The following events in the Philippines’ anti-money laundering regime greatly enhanced the chances of the Philippines in getting delisted.


1. Republic Act No. 9194. The Congress amended the AMLA by passing R.A. No. 9194, which took effect on 23 March 2003. The amendments have sufficiently addressed the major deficiencies in the AMLA, according to the FATF.

2. Anti-Money Laundering Desks. Upon AMLC’s initiative, an AML desk was created in all relevant law-enforcement agencies, regulatory and supervising authorities and other government agencies which serve as AMLC’s contact point in their respective jurisdictions for a more resolute prevention, detection, suppression, investigation, and prosecution of money laundering offenses, not to mention underlying unlawful activities/predicate crimes.

3. Two (2) Special Teams of Department of Justice (DOJ) AML Prosecutors and State Counsels. Upon request of the AMLC, a Task Force against Money Laundering (composed of State Prosecutors) was created by the DOJ on 5 July 2002. Its tasks are: To conduct preliminary investigation of ML cases filed by the AMLC; and to handle the prosecution, together with AMLC lawyers, of ML cases in court. Likewise, upon AMLC’s request, the DOJ established an AML Desk (composed of State Counsels) on 6 August 2003. Its task is to assist and coordinate with the AMLC in MLAT and extradition matters related to money laundering cases.

4. Financial Sector Liaison Committee (FSLC). On 31 May 2004, the AMLC approved the creation of the FSLC, which is composed of the representatives from the AMLC, the Supervising Authorities, industry associations and associations of covered institutions’ compliance officers. The FSLC, which is chaired by the AMLC Executive Director, serves as an effective coordinating mechanism/contact point in initiating dialogue/consultation with covered institutions especially on the issues concerning their compliance with the AMLA, as amended.

5. Special Anti-Money Laundering Courts. On 1 June 2004, the Philippine Supreme Court approved the AMLC proposal to designate SPECIAL ANTI-MONEY LAUNDERING COURTS to try and decide money laundering cases and other violations of R.A. No. 9160, as amended, otherwise known as the Anti-Money Laundering Act of 2001.

6. AMLC Resolutions Against the Financing of Terrorism. The AMLC has issued 45 Resolutions directing all covered institutions to report to AMLC transactions and assets, if any, of designated terrorist individuals and organizations as well as any person/group with links to terrorist organizations, i.e. Osama Bin Laden, Al-Qaeda, Jemaah Islamiyah, the Taliban, and other terrorist organizations designated by the UN Security Council, the United States and other foreign governments.

7. International Cooperation and Mutual Legal Assistance Extended as of 31 December 2004. The Philippines has received and promptly taken appropriate action on 80 international requests for assistance involving the following jurisdictions:

(1) US, (2) UK including Northern Ireland, (3) Indonesia, (4) Australia, (5) Slovak Republic, (6) Poland, (7) Switzerland, (8) Portugal, (9) Taiwan, (10) Hong Kong, (11) Japan, (12) Canada, (13) Bermuda, (14) Singapore, (15) Dominica West Indies, (16) South Africa, (17) Republic of Palau.

8. Seminar/Workshop on Asset Forfeiture. The Anti-Money Laundering Council conducted a Seminar/Workshop on Asset Forfeiture on July 27-30, 2004 at the Holiday Inn Resort, Clark Field, Pampanga. During the said seminar/workshop, AMLC Secretariat officials together with Solicitors from the Office of the Solicitor General and the Bangko Sentral ng Pilipinas General Counsel and Consultant drafted the proposed Rules of Procedure on Civil Forfeiture of Monetary Instrument, Property or Proceeds Related to an Unlawful Activity or a Money Laundering Offense under R.A. No. 9160, as amended. However, due to lack of material time, the initial draft of the proposed Rules was not yet completed/finalized.
... let us make our country a peaceful and safe haven
for all law-abiding people and a dangerous place for money
launderers, terrorist financiers and other organized crime groups ...
 
Retired Justices Bernardo Pardo and Jose Vitug led the participants in drafting/finalizing the proposed Rules on Civil Forfeiture.
The proposed Rule on Civil Forfeiture, drafted by the lawyers of the Anti-Money Laundering Council (AMLC) Secretariat, the Office of the Solicitor General, the Bangko Sentral ng Pilipinas, the Securities and Exchange Commission, the Insurance Commission, Mr. Graham Pinner, AMLC consultant from the United Nations Office on Drugs and Crime (UNODC) under the guidance of Justices Bernardo Pardo and Jose Vitug, was transmitted to the Supreme Court (SC), on 3 January 2005, for consideration/approval.

9. AMLC Website. In July 2004, the AMLC website was created by AMLCS’s IT staff. On 10 August 2004, the Department of Science and Technology (DOST) approved the AMLC’s domain name service (dns): www.amlc.gov.ph. On 17 August 2004, the AMLC website was activated and contains inter alia the Anti-Money Laundering Act of 2001, as amended and Revised Implementing Rules and Regulations. It also contains the AMLC Secretariat address, telephone numbers, fax, email address for public assistance and queries. To be further developed is a private portal which can only be accessed by those who will be given an access code, i.e. covered institutions, etc.

10. AMLC Training Unit. On 9 August 2004, the Council approved the creation of a training unit in the AMLC Secretariat which will design training programs and conduct lectures for covered institutions, supervising authorities, law enforcement agencies, prosecutors, judges, and the public in general. The Council has requested the BSP Human Resource Management Department to assist the AMLC in the creation of said training unit.

11. AML Educational Program. As of 31 December 2004, the AMLC had conducted a total of 241 seminars/workshops/lectures on the AMLA, as amended and its IRRs, on the pernicious effects of money laundering, the methods and techniques used in money laundering and how to effectively prosecute and punish money launderers, and 486 briefings in transaction reporting procedures nationwide. Participants included covered institutions’ personnel - banks, insurance companies, investment and securities houses, BSP, SEC, IC examiners and officers, law enforcement and military personnel, prosecutors, judges, businessmen, the academe, the media and the general public.

12. Memorandum of Understanding (MOU) with other relevant government agencies. The AMLC has existing MOUs with the Criminal Investigation and Detection Group of the Philippine National Police, the Department of Justice, the Philippine Center on Transnational Crime and the Philippine Drug Enforcement Agency. It is set to sign an MOU with other relevant government agencies.

13. Money laundering and related cases. The AMLC filed as of 31 December 2004 sixty five (65) cases, as follows: money laundering cases (30), petitions for extension of freeze order (5), civil forfeiture cases (23), applications for bank inquiry (5) and applications for freeze order (2). Out of the 30 ML cases, 24 are being tried before the Regional Trial Courts of Binangonan, Pasig and Lapu-Lapu City, and 6 are pending preliminary investigation before the Department of Justice.
Sometime in September 2003, the AMLC was advised by the Anti-Illegal Drugs Special Operations Task Force (AIDSOTF) that a drug syndicate purchased several parcels of land in Tanza, Cavite where a shabu laboratory was put up. On 30 March 2004, the AMLC initiated the civil forfeiture of said properties before the RTC of Trece Martires, Branch 23. In the meantime, said shabu laboratory is now being utilized as a drug rehabilitation center.

On 11 June 2004, the RTC of Manila, Branch 21, ordered the forfeiture of funds associated with the pyramiding scam involving a certain Ferdinand Sison.

14. Memorandum of Understanding (MOU) with other financial intelligence units. To facilitate the exchange of information, the AMLC had entered into an MOU with its counterpart FIUs, initially with the Korean Financial Intelligence Unit (KoFIU) on 16 June 2004, the Bank Negara Malaysia on 4 August 2004 and the Indonesian Financial Transaction Reports and Analysis Center (INTRAC) on 5 October 2004, and with the FIUs of Thailand and Palau on 26 October 2004.

15. IT Capability. The AMLC, thru its Information Management and Analysis Staff (Staff), has the technical capacity to securely receive from covered institutions via electronic means covered transaction reports (CTRs) and suspicious transaction reports (STRs). The CTR database is presently being queried for the purpose of either matching STRs to other CTRs and in response to other FIU’s requests for information.

16. Face-to-face Meeting with the Financial Action Task Force (FATF) Asia Pacific Review Group. On 14 May 2004 in Hong Kong, on 13 June 2004 in Seoul, Korea, and on 4 October 2004 in Brunei, Darussalam, the AMLC Secretariat senior officials and BSP officials had a face-to-face meeting with the FATF Asia Pacific Review Group.

The Review Group said that the Philippines has made “major progress” in the implementation of its anti-money laundering regime and the FATF’s on-site visit, which is the last and the final stage of the delisting process. Furthermore, the Review Group informed the Philippine delegation that it would submit its report to the FATF during the October plenary meeting and that the AMLC would be advised accordingly.

17. AMLC Mentor. The United Nations Office on Drugs and Crimes (UNODC) Global Program on Money Laundering (GPML) provided a mentor to the AMLC, for a period of 6 months (effective November 2004), in the person of Mr. Graham Pinner, former Deputy Director of AUSTRAC (Australia’s FIU), to ensure and help strengthen further AMLC’s effective implementation of the Philippines’ anti-money laundering legislation. The mentoring program would be helpful to the AMLC in its efforts to have the Philippines removed from the FATF Non-Cooperative Countries and Territories List.
It is worthy to mention, too, that the Philippines’ success in hurdling the challenge posed by the FATF in its delisting process, can be attributed to the concerted efforts of all relevant and concerned agencies and entities in combating the evils of money laundering and terrorist financing.

The AMLC and its Secretariat would like to acknowledge the cooperation and effective coordination of the regulatory and supervisory authorities, the covered institutions, the industry associations in banking, insurance and securities, the law-enforcement and prosecutorial agencies and the judiciary, for vigorously working with the AMLC in effectively implementing the anti-money laundering reforms in the Philippines. We also give special recognition to the Congressional Oversight Committee for its full and unwavering support through the amendments to the AMLA. And most of all, let us make our country a peaceful and safe haven – for all law-abiding people – and a dangerous place – for money launderers, terrorist financiers and other organized crime groups.
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