Corporate Watch

Nulla poena sine lege (Latin for “no penalty without a law”).

It was painfully frustrating to watch the Senate Blue Ribbon Committee hearing last week where incensed legislators skewered and charred the Bureau of Customs (BoC), Department of Finance, Bangko Sentral, Bureau of Immigration, Bureau of Internal Revenue, the Philippine National Police and the overseer Anti-Money Laundering Council (AMLC) for their delayed reaction on the alleged $447 million (P22.68 billion) that entered the Philippines from September 2019 to February 2020, suspected to be from online gambling operations (Philippine Offshore Gaming Operators or POGOs). AMLC chief Mel Racela said that the multimillion-dollar inflows that were flagged by Committee Chair Senator Richard Gordon as “suspicious” were “not unlawful” just yet.

Is there not an Anti-Money Laundering Act of 2001, RA 9160, “An Act Defining the Crime of Money Laundering, providing penalties therefor and for other purposes”? Yes — but read SEC. 4. Money Laundering Offense: “Money laundering is a crime whereby the proceeds of an unlawful activity are transacted, thereby making them appear to have originated from legitimate sources.” SEC. 3.i. defines “Unlawful activity” as “any act or omission or series or combination thereof involving or having relation to the following”: kidnapping, drugs, graft and corruption, plunder, robbery and extortion, jueteng and other banned gambling, piracy on the high seas, qualified theft, swindling, smuggling, violations of the Electronic Commerce Act of 2000, hijacking, securities fraud, and felonies punishable under the penal laws of other countries. Fourteen specific “predicate crimes” are listed whereby “Any person may be charged with and convicted of BOTH the offense of money laundering and the unlawful activity as defined (SEC. 6.a).”

“We cannot establish money laundering as long as we do not establish the unlawful activity.” Racela said (Inquirer, March 5). “The law that created the AMLC puts the burden of proof on the government and not the alleged money launderer… We need to establish… that these proceeds are proceeds of unlawful activities and the objectives of bringing that into the country is to launder it,” Racela pointed out at the Senate hearing (Rappler, March 5).

Gordon showed a list of suspected “mules” (couriers) who have been regularly bringing in foreign currency in bulk, declaring such huge amounts upon entry at the Ninoy Aquino International Airport. Customs representatives at the Senate hearing said they cannot confiscate amounts brought by inbound passengers, as long as these are outrightly declared. But the BoC said earlier that syndicates were able to bring in P18.7 billion in dirty money to the country with the “help of some police, military, and airport security personnel.” (Rappler, March 3). They knew “who’s who” in suspected money laundering, confirming that a certain “Rodriguez group” brought in around P10.2 billion. The same names were in Gordon’s list presented to the Senate plenary last week.

Yet the BoC could do nothing. And the AMLC just has to wait until concerned government functionaries have done their work, and a case has been filed with the Regional Trial Court for the primary crime (separate, and prior to the money laundering case), which court, upon weighing merits of both cases might issue an authority to look into the bank accounts of the suspects — a critical step in the whole procedure, because there is that formidable “Bank Secrecy Law” that exists in only the Philippines aside from Lebanon, in the whole world. Gasp! And a small detail — who is the “affected” party, the complainant who will file the initial, separate criminal case (chosen from among the 14 qualifying unlawful activities in SEC. 3.i. of the Anti-Money Laundering Law) that will trigger the money laundering case?

The US Bureau of International Narcotics and Law Enforcement Affairs, in its International Narcotics Control Strategy Report, Volume II, “Money Laundering” (March 2020) knows the legislative and regulatory deficiencies of the anti-money laundering programs in the Philippines:

“Philippine law limits the AMLC’s investigative authority to money laundering and terrorist financing cases, not the underlying predicate acts, which must be investigated by other agencies. But these agencies, unlike AMLC, do not have authority to obtain bank records. AMLC’s cooperation with other law enforcement agencies is minimal, limiting the flow of information and making it harder to connect the predicate act with the money laundering.”

Republic Act 1405, the Philippines’ bank secrecy act, limits disclosures of and inquiry into financial information held at banking institutions within the Philippines. The act’s strict guidelines impede law enforcement investigations and remain a significant deficiency in the current AML regime.

“Tax evasion, the falsification of public documents, and non-currency forgeries are not listed as predicate offenses to money laundering.”

And the US AMLA says there must be a connection between the POGOs and money laundering:

“The single-transaction reporting threshold for gaming transactions remains high at $100,000. The online gaming industry, which targets offshore players, has grown rapidly over the past three years, and authorities have expressed concern regarding potential money laundering through these operations, although there have been no money laundering cases related to online gaming.”

Senate Minority Leader Franklin Drilon said last week that it was “stupid” for the Philippine Amusement and Gaming Corporation (Pagcor) to allow Chinese-run online gambling operations in the Philippines just for government revenues (Rappler, March 05, 2020). At the Senate hearing, he “scolded” Pagcor AVP Dave Sevilla, citing the crimes on the rise linked to POGO operations aside from money laundering, such as the favored passport and visa “arrangements” with immigration, the sex trafficking and kidnapping.

But while the Senate Blue Ribbon Committee was turning blue in the face ranting and raving about the POGOs and money laundering, Presidential Spokesman Salvador Panelo, announced on simultaneous nationwide TV that President Rodrigo Duterte “cannot be rushed” into deciding on calls to suspend POGO operations over supposed crime links. Why not, when “in July 26, 2019, Duterte ordered the closure of all gaming schemes operated, licensed, and franchised by the Philippine Charity Sweepstakes Office (PCSO) due to ‘massive corruption,’ but restored lotto operations four days later amid widespread criticism over the inclusion of the state-sanctioned numbers game,” Rappler taunted on March 5.

“You don’t want POGOs? Pass a law!” Finance Secretary Carlos Dominguez III boomed at legislators in fiery challenge (Philippine Daily Inquirer, March 06). “We are not the ones who make things legal or illegal — it’s the legislature,” Dominguez said using “we” to refer to the Executive branch.

In a speech before new local treasurers on Friday (March 6), Dominguez reiterated that the DoF and the Bangko Sentral ng Pilipinas (BSP) had been pushing for amendments to AMLA and the Bank Secrecy law to “strengthen our ability to fight tax evasion and other financial crimes.”

The Legislature has best to look into amending and upgrading the laws on Money Laundering and ending the Bank Secrecy Act that coddles and protects wrongdoers.

Otherwise, it will always be “Nulla poena sine lege.”


Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.