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The cultural dimension of the Antimoney-Laundering Law

(Article published in the October 1, 2001 issue of TODAY, Business Section)

The task of avoiding the sanctions threatened by the Financial Action Task Force (FATF) against money laundering did not end with the passage of the Antimoney-Laundering Act of 2001. The FATF not only wants a law criminalizing money laundering; more important, it wants to stop global money laundering. Therefore, it is just as interested, if not more so, in the enforcement and compliance aspects of the law.

A law as complex as the Antimoney-Laundering Act of 2001 is certain to spawn many questions, among them issues of constitutional vagueness, quantification of the administrative costs of compliance on the part of the institutions subject to reporting requirements, and problems of detection and prosecution of the prescribed offenses. Our lawmakers, some of whom have not worked as hard in their lives, in general are to be commended for meeting the deadline, and, for the time being, spared critique of their hardwork.

Some aspects of the law, however, may be worth pointing out at this time, as they provide, particularly those who are looking in from the outside, an insight into some of our cultural quirks. Three items immediately come to mind: the use of the term "covered," distrust of the government and aversion to taxes.

The word covered in the law does not mean hidden from view. It is a legal term of art in the Philippines, adopted also by non-lawyers who have the misfortune of constantly dealing with lawyers, that is synonymous to "subject." Thus, when lawyers want to convey the idea that a certain transaction is governed by a specific provision of law, they say that the transaction is covered by the law.

A crucial part of the Antimoney Laundering Act deals with the reporting of certain transactions to the central authority that is tasked with the duty of putting into motion the process of investigation and, if necessary, prosecution of the money laundering. Elsewhere in the world, those transactions are called "suspicious" transactions, meaning transactions which carry some indicia of being part of money-laundering scheme. They may, after due investigation is conducted, turn out to be innocent transactions, but they are captured by the reporting net nevertheless just in case.

But while other countries have no qualms calling these transactions by their right name, we, even in the early drafts of the law, fear to put the label suspicious on these transactions. In the deep recesses of our national psyche, we consider a "suspect" to be, ipso facto, a wrong-doer already. And, if the unfortunate suspect is eventually exonerated, he is innocent only in the eyes of the law, but not in the eyes of his social class. His not being convicted is attributed not to his lack of culpability but to the savvy of his lawyers or his ability to pay or otherwise influence the prosecution or judiciary, or worse, to both. So the law avoided "suspicious transaction" like a plague and used "covered" instead.

Another feature jumping out of the legal text is our obvious distrust – or more accurately, a love-hate relationship – of those whom we entrust with the duty of implementing the law. On the other hand, the administrative machinery is given powers needed to achieve the objectives of the law; on the other, there are restrictions and limitations that hamper the implementor’s performance. There is always the fear of the government machinery being abused for political purposes, if not monetary gain – a pervasive atmosphere is distrust of the government.

This is epitomized by the involvement of the judiciary in the investigative process. There is a dubious belief that the judiciary is the proper venue, not only for the proper interplay of social values, like justice and fairness, but also the protection of one’s interests through extra-legal forces, e.g. influence.

Finally, the law is completely silent on tax evasion. Despite the national need for taxes, and the golden opportunity to put more muscle in tax collection by considering attempt to hide from the taxman as a form of money laundering, the Antimoney-Laundering Act of 2001 considers it neither a predicate offense nor a mode of commission. Apparently, we consider it unlawful to hide the ransom taken from kidnap victims a crime, but we are not bothered at all by the concealing of money which should have been paid to the government to pay for the services we all boisterously demand.