(Article published in the Aug 25,2003 issue of TODAY, Business Section)
Senator Panfilo Lacson, allegedly disappointed that the Anti-Money
Laudering Council (AMLA) did not jump, like a trained dog, to freeze the
bank accounts of a certain “Jose Pidal”, was reported last Friday as
planning to write the Financial Action Task Force (FATF) to compel the
AMLC to act on his exposé on First Gentleman Mike Arroyo.
am a fan of neither Panfilo Lacson, who does not know me from Adam, nor
Mike Arroyo, who was a few years my junior at the Ateneo (the unspoken
rule among Ateneans is once your junior, always your junior), but I have a
citizen’s interest in helping that a young institution, like the AMLC,
is understood for what it really is and allowed undistracted to do what it
is intended to do, instead of being pilloried for not condescending to the
designs of those who wish to manipulate it to their advantage.
AMLC was not conceived as another Department of Justice or Ombudsman,
the literature on international money laundering, when referring to the
functional equivalent of the AMLC in the various jurisdictions cooperating
in the drive to deny criminals the benefit of the proceed of their serious
crimes, use the descriptive phrase “financial intelligence unit”. It is seen as a lymph node in the body politic, monitoring
the blood stream, trapping the offending virus or bacteria, and, calling
on pain and fever, when the infection reaches an intolerable level, to
warn the other organs that the system appears to be under
took a while for Congress to understand this primarily unobstrusive and
filtering role of the AMLC and, when it finally did, we were saddled with
a law that had a quaint distinction between a “suspicious transaction”
and a “covered transaction”. Be
that as it may, the present law nevertheless affirms that central to the
effectivity of the AMLC is its free and continuous access to transactions
involving the flow of money and, for that reason, the first in the
enumeration of functions of the AMLC is “to require and receive covered
or suspicious transaction reports from covered institutions” (Sec.7(1),
R.A. No. 9160, as amended). Only fifth in the enumeration is the power to “investigate
suspicious and covered transactions deemed suspicious after an
investigation by AMLC, money laundering
confirms the idea, recognized also by the cooperative jurisdictions in
their own laws, that the primary line of defense against money laundering,
is the corps of “covered
institutions” who handle the bulk of money transactions.
It is they who must, as front liners, determine for themselves
whether a client is proposing a transaction that might be primarily for
the purpose of disguising dirty in order to make it appear clean.
Thus, it is they who must do their own “know your client”
drills to ensure that the transactions their client is proposing are
compatible with his legitimate activities.
Those that are not are supposed to be reported as “suspicious
transactions”. And to
ensure that a covered institution takes its role seriously, it is also
required to report to the AMLC all transactions beyond a certain threshold
amount, Php 500,000. These
are called “covered transactions”.
These reports constitute the grist of AMLC’s mills (Sec. 9 (c),
R.A. No. 9160, as amended).
investigative power of the AMLC is, as previously pointed out, in Section
7(5) of the law. That legal
provision clearly limits the AMLC’s power to investigate to four areas,
namely, “suspicious” transactions, “covered transactions deemed
suspicious after an investigation by AMLC”, money laundering activities,
and other violations of the anti-money laundering law.
is suspicious to the goose might not be suspicious to the gander and
therefore the law makes clear what is to be considered “suspicious”.
suspicious transaction is a transaction “with a covered institution,
regardless of the amount involved, with no apparent legal and economic
justification, when there is reasonable ground to believe, after an
internal investigation conducted by the covered institution, is directly
related to any unlawful activity or money laundering offense” as defined
in Sections (3)I and 4 of the law.
then, what the AMLC may investigate as a “suspicious transaction” must
be one that is reported to it as such by a covered institution which is
expected by the law to have made its own internal investigation prior to
making the report.
second type of transaction that the AMLC may investigate is a “covered
transaction deemed suspicious after an investigation by AMLC”.
To make sense out this curious provision that authorizes an
investigation by the AMLC of what it has already investigated, one must
construe this to mean an authorization for the AMLC to investigate a
covered transaction (which was reported to it simply because it was above
the threshold of Php 500,000) after it receives reliable information from
sources other than the covered institution that the transaction is
suspicious, that is, that (a) the transaction is without any legal and
economic justification, or (b) there are reasonable grounds to believe
that the money is related to any unlawful activity or money laundering
deliberate use of the phrase “reasonable grounds to believe” indicates
the legislative intent to ensure that the standard that the AMLC uses in
determining whether or not it should proceed to a more extensive
investigation is the same degree of certitude that justifies a fiscal’s
finding of a prima facie case against a respondent.
any rate, it is clear that the investigative power of the AMLC may be
brought to bear on a transaction only if it is either (a) determined to be
suspicious by the covered institution after it has made its internal
investigation; or (b) deemed suspicious by the AMLC after it has received
reliable information. In both
cases, the transaction must be a transaction reported by a covered
the AMLC’s investigations indicate that the transaction constitutes a
disguising of dirty money, then the task of the AMLC is to pass the ball
to the Department of Justice or the Ombudsman for the prosecution of the
offense (Sec. 7(4), R.A. No. 9160, as amended, and to the Solicitor
General for the forfeiture of the funds and other remedial proceedings
(Sec. 7(3), R.A. No.9160).
third and fourth areas of AMLC investigation, under Section 7(5) of R.A.
No. 9160, as amended, refer not to transactions but to “money laundering
activities” and “violations” of the anti-money laundering law.
Since money laundering has been criminalized under Section 4 of
R.A.No. 9160, as amended, and since criminal penalties are attached to
violations of the anti-money laundering law, the investigative authority
of the AMLC is limited to gathering evidence that would support a prima
facie finding by the Department of Justice or the Ombudsman.
The torch is then to be passed on to these agencies to do their
strong argument could be made therefore for the proposition that
becausethe AMLC’s power to investigate is a limited one, not every Tom,
Dick and Harry, whether plain citizen or exalted senator, could call on
the AMLC to conduct an investigation on any old or new accusation against
a person or institution and expect to be attended to as a matter of right.
The AMLC’s power to investigate has very narrow confines and must
be exercised in the light of core obligation to act as the country
financial intelligence unit.
AMLC, in fairness, must be given an opportunity to satisfy itself that
attending to the complaint would not distract it from its primary duty of
keeping the money stream clean, especially when the accusation could be
handled more expeditiously and fairly by another government agency.
final note. The good
senator’s plan to ask the FATF to compel the AMLC to act on what Mike
Arroyo derisively calls a “parliamentary privilege striptease”, if he
indeed voiced such an intention, indicates a serious misunderstanding of
the FATF. The FATF has no power to compel anybody.
The FATF works on the basis of “recommendations”. Even in the so-called imposition of countermeasures, it merely recommends to its members the application of stringent standards when dealing with the non-cooperative countries. It does not speak well of one who wants to run for president to exhibit such ignorance of the true character of the FATF.