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Augmenting the funds of AMLC

(Article published in the Mar 7,2012 issue of Manila Standard Today) 

Presently, the Philippines is in the “grey” list of Financial Action Task Force (FATF), or just a shade away from “blacklist.”  And if we do not on time, i.e. by June this year when the FATF holds its Plenary session, sufficiently address the concerns raised by the Asia Pacific Group on Money Laundering (APG), of which we are a member, in its 08 July 2009 Mutual Evaluation Report, we will be at peril of being treated as a international pariah, with the cries of “unclean, unclean” constantly resounding in our ears.

Beyond such auditory torment lie the more telling consequences of being ostracized: from that of being subjected to more stringent and tedious requirements imposed by foreign banks, ipso facto slowing down our commercial trade and derailing payment of our international transactions, to their outright refusal, by reason of increased costs and perceived risks to them of doing business with us, to deal with our financial institutions.  Any of these will translate into, at the very least, delays to be suffered by businessmen, extreme difficulties for our students abroad who rely on monies and allowances sent to them by their parents and relatives from the Philippines, and severe constriction of the channels through which money flow from our overseas workers to their families who have gotten used to receiving remittances if not regularly, at least on Christmases and birthdays and on other occasions of family rejoicing.

 In the very little time have left for us to finish the task of complying with the recommendations of the APG, we urgently need to act and act very decisively.
 










     

The most disturbing finding in APG’s Mutual Evaluation Report is , from where I sit, the observation that “to improve effectiveness of their (the Anti-Money Laundering Council’s units’) analysis and compliance activities, more resources are needed to properly develop these areas of operations.”  It is more than a gentle reminder of FATF Recommendation No. 30 asking countries to “provide their competent authorities involved in combating money laundering and terrorist financing with adequate financial, human and technical resources.” In fact, it is, in more brutal ordinary-speak, a statement that we have been remiss in our obligation to adequately fund the AMLC.

The APG, to our embarrassment, was correct. Until as recently as the last two years, our funding record is not something we can be proud of.  AMLC’s approved budget for 2010 amounted to Php 25,654 millions, broken down into Php  9.335 million for maintenance and other expenses and Php 16.319 million as contribution of the Congressional Initiative Fund.  The Department of Budget and Maintenance, however, released no money from the Congressional Initiative Fund. Similarly, for the following year, only Php 9.690 was approved, out of the proposed budget of Php 32.879 million.  That amount is clearly not enough to enable AMLC effectively do its job.

Actually, these pitiful amounts provided for 2010 and 2011 simply confirm a long tradition of dismal funding for AMLC; the budgetary appropriations in 2002 was only Php 8.684 million; in 2003 and 2004, both zero; in 2005 and 2006, Php 10.0 million each; in 2007 to 2009 inclusive, Php 15.0 million, Php 15.21 million and Php 15.654, respectively. 

This inadequacy of the funding, seen particularly in the light of the mandate of the AMLC, did not escape the notice of the APG’s assessors when they came for an on-site examination preparatory to the Mutual Evaluation Report. 

The manifestations they saw with their own eyes. For instance, they noted that while the AMLC doubled its workforce in the two prior years, AMLC’s operating budget increased only slightly over 50%, not going markedly above Php 15 million.  They were furthermore dismayed to learn that, due to budget limitations, the installation of equipment that would give AMLC direct access to databases had to be deferred.  The acquisition of other equipment needed to effectively develop and maintain the AMLC’s enlarging data holdings also had to be postponed due lack of money.  It seems a cruel statement, but I find the temptation too difficult to resist, money is not the AMLC’s problem; instead, it is the solution to its difficulties.

Fortunately, Senate Bill 2484, authored by Sen. Sergio Osmeña III, contains an attempt at the solution.  A new subsection is proposed to be added to Section 12 on Forfeiture Provisions that provides:

(e) DISPOSITION OF FORFEITED ASSETS AND RETENTION. After deducting cost of litigation, seventy-five percent (75%) of the net proceeds of the forfeited assets or proceeds therefrom shall be turned over to the National Treasury and the remaining twenty-five percent (25%) shall be retained by the AMLC to augment the appropriation for its operations and maintenance in the General Appropriations Act...”

If the suggestion is passed into law, the AMLC would have a funding source that is not dependent on the generosity of the holders of the purse, some of whom may have interest in keeping the AMLC feeble, but instead on the efficacy of AMLC’s vigilance and the impact of its actions.

The funding that can be expected from 25%  share in the forfeited funds is, though not enormous, is enough to make a difference.  As of 31 January 2011, AMLC had forfeited Php 21,986,126.08, remitting Php 19,584,557.53 to the National Treasury even as Php 2,401,568.50 was claimed by private persons.  Twenty-five percent of what had gone to the National Treasury would have roughly increased by one-third what the AMLC had received by way of budgetary allocations.  To date, already adjudged and just awaiting or in process of execution are civil forfeitures amounting to Php 81,591,902.48.

         All told, it is obvious that with more funds will come more capability, more capability will enhance greater performance; and the greater AMLC performance, the more respectable our country will be.  A small country like ours has more to benefit by showing the community of nations that it is a willing co-operator than by, instead, taking the stance of a defiant isolationist.

     

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