By Genshen L. Espedido
A MEASURE seeking to amend the Anti-Money Laundering Act (AMLA) has been placed on the back burner as Congress focuses on passing measures such as the Philippine Economic Stimulus Act (PESA) and Financial Institutions Strategic Transfer (FIST) Bill which aims to address the economic impact of the ongoing coronavirus crisis.
House Committee on Banks and Financial Intermediaries Chair and Quirino Rep. Junie E. Cua said the coronavirus pandemic has prompted Congress to change its priorities in legislation.
“We need to attend more importantly to rescuing our economy and so we need to focus more on measures that will enable us to recover fast, to empower our banking industry… in anticipation of business failures in the coming months. So ito ngayon ang (for now, this is) more important to us,” Mr. Cua told BusinessWorld in a phone interview on Sunday.
House Bill 6174, which proposes to introduce more stringent provisions in Republic Act 9160 or the AMLA, has been pending with the House Committee on Banks and Financial Intermediaries since February. At the Senate, the counterpart measure, Senate Bill 1412, is also pending at the committee level.
Mr. Cua said the committee hearings on the AMLA amendments will resume as soon as the “first opportunity” comes.
“Meanwhile, the Financial Action Task Force (FATF) because of the character of this crisis…it took the initiative of extending the period required of us and I think that should provide some space in making the necessary adjustments in our timeline,” he said.
After the country’s mutual evaluation review, the Asia Pacific Group (APG) on money laundering placed the Philippines under a 12-month observation period to address deficiencies in anti-money laundering measures. Changes to the AMLA are needed so the Philippines can avoid being gray-listed by the FATF.
The FATF has extended the deadline of its observation period to February 2021 from October 2020 due to the global crisis, saying that the pandemic made it “impossible for assessed jurisdictions and assessors alike to conduct on-site visits and in-person meetings.”
Anti-Money Laundering Council (AMLC) Executive Director Mel Georgie B. Racela said that he hopes deliberations on AMLA amendments will resume after President Rodrigo R. Duterte’s State of the Nation Address (SONA) in July.
“The FATF decision gives Congress more room to accommodate COVID-19 related measures, especially given the limited session days of Congress, which is until June 4 only. With this development, we understand that sessions will resume after the SONA. The AMLC will appreciate it if deliberations will resume immediately by then,” he told BusinessWorld via Viber message on Sunday.
Asked about money-laundering risks during the lockdown, Mr. Racela said that the AMLC is “business as usual” in collaborating with law enforcement officers.
“In particular, the PNP (Philippine National Police) Anti-Cybercrime Group has always been our most active partner both before and during the lockdown. In addition, we have recently initiated several studies including analysis of reports submitted to the AMLC during the lockdown. This will be released sometime in June,” he said.
Meanwhile, House Majority Leader and Leyte Rep. Ferdinand Martin G. Romualdez said the Defeat COVID-19 Committee is set to approve on Tuesday the FIST and PESA bills. PESA proposes to inject P568 billion in the economy to help businesses and workers cope with the pandemic.
On May 11, Mr. Cua’s committee approved House Bill 6622 or FIST Bill,which provides for the transfer of banks’ bad loans to asset management companies (AMCs), as a spike in nonperforming loans is expected during the coronavirus crisis.
Under the proposed bill, bad loans and real and other properties acquired (ROPA) in settlement of loans and receivables will be sold to AMCs or so-called FIST corporations.
“It’s not really an expensive price to pay for enabling our banking sector to cope up with these mounting nonperforming loans and mounting nonperforming assets which if not handled properly…They (banks) will have liquidity problems and that’s the worst that can happen to the banking industry when we are trying to recover from this pandemic. We need the money circulating in the system and the best way to do it is through the special purpose vehicle or through the FIST Law,” Mr. Cua said.
Mr. Cua said that Congress can conduct a special session on the measure if it fails to pass the lower chamber before Congress goes on recess on June 5.
“I really would like to pass it ASAP (as soon as possible) because this is very important to the country. Once we pass it, we pass it right away to the Senate and hopefully they can act on it. But I think if the House and the Senate would not be able to pass this before we adjourn, I think these measures deserve a special session,” he said.
Mr. Cua said that he will also consider conducting a hearing on House Bill 5913 or the Virtual Banking Act of 2020 which seeks to provide a regulatory framework for virtual banks, following the need for more digital alternatives due to the pandemic.