US wants tighter anti-money laundering laws in RP
MANILA, Philippines - The US government sees a need for the Philippines to implement tighter anti-money laundering laws.
The US State Department’s 2010 International Narcotics Control Strategy Report said accountants, casinos, nonprofit organizations and designated non-financial businesses and professions should be fully regulated and supervised to prevent money laundering and stop terrorist financing. They must also be required to file currency transaction reports (CTRs) and suspicious transaction reports (STRs).
The report on “Money Laundering and Financial Crimes” said that since 2005, the Philippines has continued to make progress enhancing and implementing its anti-money laundering regime, but the government needs to take immediate steps to comprehensively criminalize terrorist financing.
“The GOP (Government of the Philippines) should enact comprehensive legislation regarding freezing and forfeiture of assets that would empower the financial intelligence unit (FIU) to issue administrative freezing orders to avoid funds being withdrawn before a court order is issued,” the report said.
“In addition, as an investigative measure, law enforcement should be given the authority to have direct access to financial records without the need for a court order,” it added.
According to the report, the Philippines continues to experience an increase in foreign organized criminal activity from China, Hong Kong and Taiwan. Insurgency groups operating in the country partially fund their activities through local crime and the trafficking of narcotics and arms, and engage in money laundering through ties to organized crime.
“The proceeds of corruption are also a source of laundered funds. Smuggling, including bulk cash smuggling, continues to be a major problem,” it said.
Citing report of the Federation of Philippine Industries, it is estimated that the government lost over $2 billion annually in revenue from uncollected taxes on smuggled items, including substantial losses from illegal imported fuel and automobiles.
Republic Act (RA) 9160 of 2001, as amended by RA 9194 of 2003 (the Anti Money Laundering Act, or AMLA) criminalizes money laundering.
The State Department said many significant crimes - including arms trafficking, racketeering, and sexual exploitation - are not currently classified as predicate crimes and the proceeds of these illegal activities are therefore exempt from the AMLA law.
Terrorist financing is not criminalized as a separate offense under Philippine law. While there is no crime of terrorist financing, a person who finances the commission of terrorism may be prosecuted as a terrorist either as a principal by inducement pursuant to Article 17 of the Revised Penal Code, or as an accomplice pursuant to Section 5 of the Human Security Act.
The report said that this flawed approach requires a terrorist act to have occurred and does not encompass general financial support to terrorist entities for other purposes (recruiting, training, social welfare projects, etc.).
The AMLA, as amended in 2003, requires the filing of suspicious transaction reports. Through 2008, the FIU had received more than 15,553 such reports.
“The requirement to report transactions linked to terrorism is not comprehensive enough, however,” the report added.
RA 9165 provides for the seizure and forfeiture of drug related assets but the report noted that the Philippines has no comprehensive legislation pertaining to civil and criminal forfeiture.
The Philippines is also a party to the UN Convention for the Suppression of the Financing of Terrorism, UN Convention against Transnational Organized Crime, 1988 UN Drug Convention, and UN Convention against Corruption.
The country is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force-style regional body.
Illegal drugs money as campaign funds
The US State Department report on narcotics control also showed that the illegal drugs trade in the country has evolved into a billion-dollar industry and that illicit narcotics money may be used to influence the May 10 elections.
The 2010 International Narcotics Control Strategy Report said the Philippine Drug Enforcement Agency (PDEA) has publicly expressed fears that illicit narcotics money could influence the 2010 elections, and has pledged to pursue any evidence of such influence in order to carry out arrests.
“With the upcoming 2010 elections, there is fear that illicit narcotics funds may affect election results. Sophisticated foreign-based drug-trafficking operations remain the biggest challenge to Philippine law enforcement,” the report said.
The report added that corruption poses a problem in Philippine law enforcement, due to low pay and lack of training. However, it recognized that the law enforcement leadership is taking the issue seriously and is attempting to address the problem.
“Despite some reports of a possible decline in the supply and demand of illegal drugs in parts of the Philippines, illegal drugs continue to pose a significant national threat, and the government recognizes them as such,” the report said.
Law enforcement officials and the PDEA said the drug problem could be considered a national security threat.
President Arroyo directed local law enforcement agencies in January 2009 to wage a “fiercer war” against drug lords.
The media highlighted drug use in the Philippines following the high-profile case of three drug-trafficking suspects from prominent families called the “Alabang Boys,” which began in late 2008. The Alabang Boys case triggered national awareness of the Philippines’ problems with illegal drugs and corruption.
It cited a PDEA report that the value of illegal drugs trafficked in the Philippines totals $6.4 billion to $8.4 billion annually. According to the most recent Department of Interior and Local Government Survey (2008), the three regions most affected were Cebu (Region 7), Northern Mindanao (Region 10), and Metro Manila (National Capital Region).
Estimates of the number of drug users in the Philippines range from 6.7 million, cited in a 2004 survey, to 1.7 million, according to an unofficial 2008 estimate by the Dangerous Drugs Board (DDB). Based on those patients now in drug rehabilitation centers, most drug users abuse multiple drugs.
The US report also cited transnational drug groups, particularly the West African Drugs Syndicate, that also continue to recruit and use overseas Filipino workers (OFWs) as drug couriers to smuggle and transport illegal drugs to China, Malaysia, and Vietnam. Several Filipinos, mostly women, are jailed abroad for drug trafficking, and face severe prison sentences, including the death penalty in countries such as China.
Shabu and marijuana are the two drugs that dominate the country’s illegal drug market. Ecstacy and ketamine are also subjects of abuse in the Philippines.
The report said the Philippines is a likely source of shabu to Australia, Canada, Japan, and South Korea. The Philippines is a primary source of shabu for Guam and Hawaii.
PDEA, the report said, has made a great effort to improve its public image and has implemented internal policing of its agent workforce, citing a 2009 Global Competitiveness Survey Report that listed PDEA as one of the top 10 least corrupt agencies in the Philippines.
In general, the report said Philippine law enforcement agencies such as the Philippine National Police, PDEA, National Bureau of Investigation, and Bureau of Customs actively pursue anti-drug enforcement operations.
In 2009, PDEA reported that authorities seized 931 kilograms of shabu worth $152 million; 1,300 kilos of processed marijuana leaves and buds worth $710,000; 6.3 million marijuana plants (including seedlings) valued at $22.3 million; 216 kilos of cocaine; 2,090 tablets of ecstasy worth $54,340; and $408,135 worth of chemicals intended for narcotics processing.
The report said PDEA, a relatively young organization, remains too small to address the entire nation’s problems with the trafficking and sale of illicit drugs. It currently relies on other agencies for seconded personnel assistance.
Meanwhile, the Dangerous Drugs Board (DDB) disclosed that the agency is investigating reports that some local candidates in the May elections have turned drug trafficking to raise campaign funds.
DDB deputy chairperson Edgardo Galvante said there are intelligence reports on some candidates that are allegedly engaged in the illegal drugs trade to generate campaign funds for the coming polls.
Galvante refused to give more details after he bared the alleged link of some politicians to illegal drugs during a press briefing on the seminar-workshop at the Clark Freeport in Pampanga on the dangerous drugs law that was attended by judges, prosecutors and law enforcers from Regions 1, 2 and 3
He said the identities of the erring candidates would be released to the public after the gathering of evidences that could be the basis for the filing of charges in court.
Senior Superintendent Frank Uyami, deputy chief of the police Anti-Illegal Drugs Special Operations Task Force (AIDSO-TF), said anti-drugs enforcement units are monitoring the possible involvement of some candidates in drug trafficking.
Uyami said the police, however, does not have any record that illegal drugs trade increase during the campaign period in past elections.
He said that 16 Chinese drug syndicates are still operating in the country that manufacture and sell shabu for P5 million per kilo in the local market.
By Pia Lee-Brago
With Ding Cervantes
(The Philippine Star)
Updated March 03, 2010 12:00 AM
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US wants tighter anti-money laundering laws in Phillipines