No haven for launderers (3)

published 8 Dec 2008, MST

Lawyer Vicente Aquino, executive director of the secretariat of the Anti-Money Laundering Council, says one of the reasons the Philippines was taken out of the Financial Action Task Force’s list of uncooperative countries was “our excellent record in international cooperation.”

And indeed, the act of making money that comes from dirty deeds look as though it came from legitimate activities blurs boundaries between and among nations. It’s a multi-step process, involving deposits to a local bank, then a transfer to yet another, sometimes foreign bank, then a return to the country of origin, this time looking like clean funds. Or maybe that’s putting it simplistically. Experts would have practical knowledge.

But how have our authorities fared, really, in terms of the number of cases pursued and convictions obtained, involving Filipino nationals? Remember that the crime of money laundering is distinct and separate from the offense—predicate crimes, like drug trafficking, kidnapping for ransom, graft and corruption, and many others—that generated the dirty funds.

According to its accomplishment report as of Oct. 31, the AMLC, through its operational arm, the secretariat, is currently handling 76 cases. Of this number, 49 cases are with the trial courts, 16 with the Court of Appeals, 10 with the Justice Department and one with the Office of the Ombudsman. “Ongoing cases” refer to cases filled against those believed to have committed the crime of laundering, applications for freeze order, extensions of freeze order, applications for bank inquiry and civil forfeiture cases.

The impression one easily gets from these figures is that whatever is being done does not seem enough. For example, the total number of suspicious transactions that has been reported to the council (since the beginning of its operations) was 22,609. And if we consider the fact that this year, an average of 434 suspicious transactions are being reported ON A MONTHLY BASIS, the number of actual cases filed becomes, well, pathetic.

That’s what the numbers seem to say. But Aquino, who has been on the job since the council was created seven years ago, has been able to observe both trends and vulnerabilities in the fight against money laundering. He recognizes that much has already been accomplished, especially in generating awareness on the part of the public. But there is much to be done.

He is first to admit, for instance, that the law could be further tweaked to enable his team to function more effectively. He wants to increase the predicate crimes to include bribery, prostitution and environmental crimes.

Aquino also thinks they could use more cooperation from lawyers, accountants and casinos, so he wants them included in the list of covered institutions which are duty-bound to report covered and suspicious transactions as defined in the law. (Of course these proposals invite debates, such as the violation of lawyers’ code of ethics pertaining to confidentiality. I don’t intend to cover that in this piece.)

Further, Aquino wishes the council would be given express authority to run after money launderers before the courts. The AMLC can then act as prosecutors; with this, it does not anymore have to rely on other government agencies which are themselves already swamped with cases of varying nature.

But as if the present workload were not daunting enough, all these proposals would mean even more work for the council secretariat, which is currently made up of 63 employees—lawyers, accountants, information technology experts and administrative support staff.

One of the first things I notice about Aquino’s office is the volume of paperwork in different-colored folders on his desk, on the side table, and probably in the filing room adjacent to his office as well. In fact I wonder whether it is even humanly possible—and I am assuming good faith here—to go through all those files, more than 400 of them coming in every month, and decide (objectively, using a consistent set of standards, and I assume too there exists one) that such and such transaction offers probable cause... or not.

What are the chances an employee would look at one report and not act on something when action is in fact due? Even if it was only due to inadvertence?

And then, how will the secretariat handle pressure from influential people who can demand that it look the other way and not see probable cause on a particular transaction? Imagine the pressure to just do nothing and move on to the next report!

Aquino takes a photograph from a drawer and shows it to me. It’s a picture of secretariat employees, himself included—and everybody is holding guns. We are used to being threatened, he says. The thick glass panels that enclose the office are proof that Aquino and his team won’t be surprised to find themselves up against characters who would stop at nothing to get away with their crime.

That may be bordering on the dramatic, but what is real is that the problem and the perception of corruption has reined in our potential as a nation. Thus, people are eager to hear news about this or that government official being nailed, finally, by the council that despises fanfare—sought by limelight-thriving politicians—but does its work nonetheless. Is there anything forthcoming here?

Swift and decisive action on offenses committed by public officials using taxpayers’ money are likely to boost the national morale. But thus far, out of the 173 corruption-related suspicious transactions reported, eight are being investigated by the council and seventeen are with the courts. Certainly the numbers, in this area at the very least, could use a little more punch.

Aquino insists his team has not lost its enthusiasm. “There are no sacred cows and no sacrificial lambs,” he declares, even as he seems to acknowledge that his job certainly looks like a modern version of searching for a needle in the haystack—and it’s as much as problem of what to do when he finds it as finding it to begin with.

Yet he proceeds to talk, almost wistfully, about an anti-money laundering regime—not a set of laws, not an organization, but an entire system where it is difficult, if not impossible, to pass of dirty money as clean.

That’s really getting ahead of ourselves. After all, the name of the game is innovation, both for launderers and authorities alike. For now, the public would feel just a bit better knowing