(Article published in the Sep 17, 2008
issue of Manila Standard Today)
two weeks ago, on 04 September, the Financial Sector Liaison Committee (FSLC),
after tackling the items in the agenda of its 9th monthly
meeting, listened to an interesting presentation by AMLC’s Ricky Funk of
three typologies of money laundering, Pinoy style.
The FSLC, which was put together less than a year ago at the
initiative of Vic Aquino, AMLC’s executive director, is a public-private
sector committee comprising all the institutional organization stake holders
concerned in keeping enforcing and complying with the country’s anti-money
laundering regime. If I am not
mistaken, the organization of such a group – to harness the synergy of all
institutions concerned, --is a first in the Asean, if not in the whole of
the 9th meeting, a regular part of the meeting will be updating
the participants’ knowledge of typologies that are drawn from actual cases
handled by the AMLC. Obviously,
familiarity with the typologies will enable the covered institutions in
sensing, as it were, the occurrence of money laundering, as and when it
once the flow of funds is uncovered, it does not take a rocket scientist to
recognize the attempt to launder money.
It is the detection of the operation while it is being conducted that
is difficult to accomplish since taken separately, the three stages of money
laundering,- i.e, the placement, the layering, and the integration, --do not
give an indication that the money flowing is dirty.
all, there is nothing wrong with placing money in an instrument or
investment; breaking up one’s cash is as harmless looking as changing a
one thousand peso bill for two five hundred peso bills; and buying an asset
in the open market is not by itself suspicious even if the funds come from
different accounts. It is when
the three of them are put together, and seen in the light of a prior crime,
called predicate offense, does the money that flowed manifests itself as
having been contaminated. But
precisely because of the seeming of legitimacy of each of the separate
stages, gate-keepers and channels of the country’s currency flow ought to
be on the look-out for typical techniques, called typologies, of money
most interesting technique that Ricky Funk described is the adept
exploitation of a feature often taken for granted in an industry.
For example, the standard retail marketing of insurance products
through numerous agents. This familiar method of reaching customers can be
perverted by the money launderer into a means of using an insurance company
as a laundry shop for the proceeds of his predicate crime.
The money launderer is able to do so because very often the
face-to-face contact between the perpetrator and the insurance company is
only through the mediation of the latter’s agents who may themselves be
unwitting instruments of the money launderer.
Take this case of hapless Rosana.
took out insurance on her own life through agent Marina from Insurance
Company with a face value of Php 5 million.
She filed her duly completed application and paid the full premium in
full. However, the policy was
not issued right away because the magnitude of amount required the
submission of additional documents; the documents are “to follow” as
soon as put all together. Rosana
left for abroad prior to the submission of the documents; it was her kin who
was entrusted with the task of finishing the transaction.
of being faithful to the trust, Rosana’s next of kin caused agent Marina
to submit a withdrawal of Rosana’s initial application as well as new
applications for two of Rosana’s relatives, to be paid for by the returned
premiums of the cancelled policy. The
withdrawal and the new applications bore what looked like Rosana’s
signature. Shortly thereafter,
even the two new applications were cancelled before the policies were issued
and the premiums were asked to be refunded.
Insurance Company, not suspecting anything, issued two crossed checks, both
payable to Rosana. The checks
were all then deposited to a bank account in the name of Rosana.
Subsequent investigation revealed, however, that the photo of Rosana
submitted to the bank appeared to be of a person different from the Rosana
who applied for the insurance policies.
The signature on the withdrawal
of the PhP5 million policy and the applications for the two new ones turned
out to be forged.
had simplified the facts to expose clearly the money laundering.
The predicate offense was committed when Rosana’s signature was
forged to turn the initial policy into cash; the placement occurred when,
already tainted but still appearing as clean to unsuspecting eyes, the
refunded premiums were used to pay for the two new policies; the layering
was effected, when in order to distance the cash from the crime, legitimate
checks were caused to be issued to Rosana; and, finally, the dirty money was
integrated when the checks were deposited with the bank, preparatory,
obviously to being withdrawn in due time by the perpetrators.
this insurance-based scheme was singular and depended on the cunning of the
perpetrator, the second type described by Funk fed on the victims’
gullibility, if not greed. The
second type was a combination of the old Ponzi scheme, laced by pyramiding,
but, this time using the modern phenomenon of the internet.
predicate crime is the false promise of exceptionally high profits made to
look even higher by fat rewards for recruiting into the system friends and
relatives equally, if not more, gullible and greedy.
Cash flow to many participants is effected through a number of bank
accounts, to escape detection and also facilitate the flight in case one is
identified by the authorities. These
bank accounts fulfill the varying stages of placement and integration.
a critical mass is already flowing through the system, the perpetrator
suddenly closes the accounts and vanishes into thin air, with the funds of
the “investors”, in his pocket, of course.
Invariably, both criminal and stolen funds go abroad in some haven or
third typology discussed by Funk, was the grossest.
It involved drugs as the predicate crime.
Tell tale signs of tainted sourcing, discernible to the adept as
early as at the placement and layering stages, are (a) the magnitude of the
amounts, uniformly in cold cash, (b) the repeated deposits in various bank
accounts, (c) the recurring purchase of
government securities, and other very liquid assets, and (d) the
occasional use of pre-paid insurance coverage, as in the case of the first
typology. Integration was
effected in the acquisition of mansions, real estate holdings, etc. which
are all common accouterments of wealth, in surfeit and overflowing.
These three typologies, of course, do not exhaust Filipino inventiveness. Subsequent Funk presentations in the coming meetings of the FLSC promise to be just as interesting and informative, especially in these hard times.